section 7 of 85R2) two or more employee must be covered only in the case of a group sickness or accident plan, or group term life insurance. In the case of an HWT only one employee is required. Insurance As per paragraph Canada Revenue Agency (CRA) guidelines (specifically – section 7 of IT 428) it is not necessary for the HWT to be a contract of insurance – the plan must be one that is based on insurance principles. The principle is that funds must be accumulated in the hands of trustees or in a trust account calculated to be sufficient to meet anticipated needs. Funding The employer shall make contributions to the Trust for a "plan year" in an amount, which together with employee contributions, if any, are required to provide the benefits under the plans to eligible employees of the employer and their dependants. Each employee shall be allocated a "plan year" not to exceed twelve months. The amount contributed must be reasonable given the employment services performed by the employee. The employer's contribution into the HWT must not exceed the amounts required to provide benefits. The contribution amount is an annual declaration and the amount cannot be amended during the twelve month policy year unless there is a life change (i.e. change in dependant requirement – Birth or Death or addition of a dependant) within the employee's household unit. In addition, the trustee can enforce the employer to make the contributions during the policy year. At the start of a subsequent policy year, a new contribution level is set. If the amount spent is less than the contribution amount, the unused amount can be carried forward into the following year. As well, if a medical expense was incurred in excess of the amount contributed, the un-reimbursed claim can be carried forward and the contribution in a subsequent year can be used to reimburse the employee. Eligible Expenses The most common definition of a medical expense is a payment made to a licensed medical practitioner qualified to practice under the provincial laws of the place where the expenses were incurred. Medical expenses eligible to be paid out of the HWT are expenses which would otherwise qualify as medical expenses within section 118.2(2) of the Income Tax Act. Some of the basic healthcare expenditures covered by an HSA include... Prescription Medicines, Drugs, & Vitamins: Generally, payments for prescription medicines