Health Care Spending Accounts - What Can Go Wrong?

Most people have a reasonable level of caution regarding new ideas and often wonder what can go wrong? Rather than have you guess, here are some common examples of things that we see go wrong:

What can go wrong?

Abuse by owners who try to put larges expenses through the account by their ownership versus employment status. This turns your Health Care Spending Account into a shareholder benefit versus an employee benefit. The expense is no longer deductible, and the reimbursement is now considered taxable income.Only expenses incurred after the account is established can be reimbursed. Old expenses that pre-date the Health Care Spending Account are not eligible. Only medical expenses can be reimbursed. The Canada Revenue Agency provides a comprehensive list on their website. Once again: medically necessary, out of pocket, provided by a certified medical practitioner licensed within the scope of their expertise.Beyond the above, this is a low risk, simple, flexible and affordable business tool that allows business owners to provide a wonderful tax efficient form of compensation that will be appreciated by employees. A Health Care Spending Account is a great way to compensate team members and an important step toward happy, healthy and productive employees.