Top 4 Reasons Self-Administering an HSA is a Bad Idea

Companies often consider self-administering their Healthcare Spending Accounts, with a view of saving money on fees. But is this really a good idea?

1. Do You Really Want to Know?

Do you really want to know the details of your employees’ health? Aside from the potential discomfort for you as an employer, it also violates your employee’s privacy. Under current legislation employers are not entitled to detailed information related to an employee’s health. If you require employees to submit expenses to you or another employee this could result in a breach of confidentiality.

2. Do You Know All of the Rules?

There are regulations that govern Health Spending Accounts (HSAs). Do you know all of them? There are taxes associated with HSAs that must be remitted at the provincial and federal level. Retail Sales Tax of 8% often must be remitted quarterly to the Provincial government. RST Is applicable to all premiums paid to group insurance contracts. By administering your HSA ‘in house’, you could be subject to additional taxes if audited. In addition to the tax rules surrounding the administration of Health Spending Accounts, there are regulations on what constitutes a claim. Are you familiar with the rules around qualified expenses?

3. Is It the Best Use of Your Time?

Receiving claim receipts, verifying claim eligibility, reviewing plan maximums, reimbursing claims and applying the correct tax, are just some of the steps necessary to reimbursing a single claim. If a claim is disputed it can add additional time and energy to the process. Is the opportunity cost really worth your time? In all likelihood spending time operating your core business and outsourcing HSA administration to an expert makes sense from both a cost and opportunity cost point of view.

4. What If?

What if your employee feels uncomfortable submitting claims to you? What if you apply the wrong tax? What if you don’t pay the employees claims fast enough? What if don’t correctly allow rollover of claims or receipts? What if you don’t know whether an expense is allowable under CRA rules? What if you don’t have the time to manage the plan? What if you find out private information about your employees? There are too many what ifs. For a small fee, you can offload these responsibilities and questions.