What’s the Difference Between Health Spending Accounts and Wellness Spending Accounts?

You want to make your company attractive to prospective employees and retain the ones you have. You know that one of the best ways to do this is to offer excellent health wellness benefits but you’re not sure how to get the best options for your company.

Two of the more recent offerings in employee health wellness benefits are Health Spending Accounts (HSA) and Wellness Spending Accounts (WSA). An HSA is more in line with traditional benefits in that it covers basic health care needs – but it can also be more flexible or cover different needs than a conventional health care plan. A WSA is more focused on encouraging your employees to pursue activities that improve both their physical and mental health.

In this article, we’ll explain to you the differences between the two types of accounts. If you need any help with your company’s health wellness benefits, BrokerLink is here for you.

What is a Health Spending Account?

The primary purpose of an HSA is to provide money for your employees to use on medical costs. You can choose to offer an HSA in addition to traditional benefits or in place of them. Standard benefits tend to cover expenses like these:

1. Glasses
2. Dental work
3. Prescription drugs
4. Massage therapy, physical therapy or a chiropractor

With an HSA, your employees get a set amount of money to spend each year on approved medical benefits. They can spend that money on themselves or their dependents but they are only covered up to the amount provided at the beginning of the year. The main appeal of this is that employees can spend the money where they feel they need it most, for example if they don’t wear glasses they can take the money allocated to new frames on a traditional plan and spend it on extra dental work. HSAs enable employees to customize their benefits and spend health benefit dollars on the items that matter most to them.

With an HSA, your employee can also cover expenses that might not traditionally be covered, such as:

• Fertility treatments
• Psychiatrist treatment
• Medical marijuana
• Specialized dietary requirements

What is a Wellness Spending Account?

A WSA is similar to an HSA in that your employees get a set amount of money they can spend each year on approved benefits. With a WSA, however, the benefits covered are different from the benefits covered by an HSA.

Wellness Spending Accounts benefits are generally associated with expenses that come with healthy living and lifestyle choices. The purpose of a WSA is to encourage employees to pursue activities that will improve both their physical and mental health.

Some of the expenses that a WSA may cover are:

• Gym memberships
• Sports equipment
• Yoga classes
• Personal development courses
• Nutrition services or supplements
• Naturopaths

You can select which services you want to have covered by a WSA. You can customize it to best suit your employees and their needs. So if you have a small workforce who loves rock climbing and consider it a vital health wellness benefit – you can include that as part of your WSA benefits. If you have employees who prefer something a little closer to the ground – like yoga – to be a good health wellness benefit, then you can cover that instead.

What else do I need to know about HSA and WSA?

These are the other things you need to know about Health Spending Accounts and Wellness Spending Accounts:

• For an HSA, benefits are tax-free – and eligible services are determined by the Canadian Revenue Association (CRA). For a WSA, the benefits are taxable, so you have more flexibility in what you select. You can choose the benefits you want to provide under a WSA – including any restrictions or maximum you want to impose.
• While a WSA can certainly be attractive since HSA benefits tend to cost more, employees may prefer to have an HSA over a WSA if you are only planning to offer one.
• Both types of accounts have a limit that you, the employer, can set.
• Employees are not obligated to spend all of the money in their HSA or WSA accounts but they cannot spend more than they contain, nor can they roll benefits over.

Whether you choose to provide HSA accounts, WSA accounts or both, you can rest assured that you are giving your employees great health wellness benefits.

How can BrokerLink help me with my health wellness benefits?

At BrokerLink, we’re here to answer any questions you may have about health wellness compensations. To get an idea of whether you should offer HSA accounts or WSA accounts, or both, we can discuss the following with you:

• Your budget
• Your goal in offering HSA or WSA accounts
• The kind of benefits your business already offers
• How these accounts can improve your employees’ well-being

Once we’ve talked through all of these areas, we can then get into more details about what kind of benefits you’d like to offer through your HSA and WSA accounts.

For an HSA account, you can select to set aside either a specific amount per month or per year for each employee. You then have to decide which benefits you want to cover with your HSA accounts – but these must be considered eligible expenses by the CRA. These can include more “traditional” expenses like massage therapy or dental visits and other expenses like nursing treatments or oxygen masks.

For a WSA account, you can also set aside a specific amount per month or year for each employee. The benefits you can cover with a WSA account are much more flexible than for an HSA account – it’s up to you what you want to cover. You can select various expenses that improve health and well-being, anything from dance lessons to fitness trackers.

We can help you determine the best way to use your health wellness benefits dollars, so your staff are satisfied and happy.

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Now you know the differences between Health Spending Accounts and Wellness Spending Accounts. Both can be great for attracting and retaining employees.

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