A Co-operators Health Care Spending Account (HCSA) is a pre-determined amount of money allocated to plan members by plan sponsors. It provides flexibility to pay for health expenses not covered by health and dental plans while controlling costs for plan sponsors.
How does an HCSA work?
Plan sponsors determine the amount of money deposited into plan members’ accounts each year. The target amount is determined by the plan member class.
Plan members can use the funds for:
- Expenses in excess of insured health and dental plan maximums
- Co-insurance and deductibles not reimbursed by insurance plans
- Expenses not eligible for reimbursement under traditional health and dental plans, subject to Canada Revenue Agency guidelines
Plan members can access their HCSA funds for the year the funds were deposited plus the following year. At
the end of the second year, unused funds revert to the plan sponsor. The HCSA runs on a calendar-year basis, allowing easy coordination with your insured plan’s calendar year maximums.
Funding the HCSA
Plan sponsors have two options:
1. Budgeted: Plan sponsors are billed monthly in advance for HCSA costs (1/12 of the annual HCSA amount). This approach is beneficial if plan sponsors prefer a predictable expense each month.
2. Non-budgeted: Plan sponsors are billed the following month for claims paid the previous month. A claim float to pay for the first month is required in advance; it’s calculated as 1.5 times the monthly claims amount.
Plan sponsors choose how much time members have to submit a claim after the end of the calendar year – 30, 60 or 90 days.
To process prior year expenses, claims must be received by our office no later than the grace period 30, 60, or 90 days of the current year. If a plan sponsor chooses 30 days, plan members would have to submit claims by Jan. 31st of the current year. After the grace period of the current year (i.e. Jan. 31st), expenses from the prior year will be ineligible.
Claims are always paid from the core benefits plan first, then submitted to any secondary payors (co-ordination of benefits), and then paid from the HCSA. This maximizes all available benefit coverages and reserves the HCSA for expenses not paid by core coverages.
Tax advantages for you and your plan members
Plan sponsor contributions and administrative expenses related to the HCSA are tax-deductible business expenses. Expenses reimbursed through the HCSA are non-taxable to plan members. Quebec residents are taxed at the provincial level on funds used to pay for eligible expenses.
Manage claims automatically
Plan members have access to the full annual contribution amount on the first day of the fund year. As claims are paid from the account, HCSA balances are updated. This ensures claims are not paid in excess of the available balance of the annual contribution amount in the plan member’s HCSA. Plan members receive claim payments by direct deposit and have access to view their information on Benefits Now for Plan Members.