Health Spending Accounts with a core group health insurance program. Several HSA Providers also offer Health Spending Accounts as stand-alone benefit solutions with carry-forward of deposited funds or incurred expenses - but not both - for a period of 12 months. Funding The employer can make contributions to an insured PHSP (like group insurance) with monthly premiums, or to a self-insured PHSP (like a Health Spending Account) on a periodic basis, or set a calendar year maximum for a plan with no prior contributions. Self-employed individuals with no employees other than family members Note: This is for an Insured Plan with an Insurer, and NOT for a Self-insured PHSP (a Health Spending Account) Business owner: $1,500/year Spouse: $1,500/year Dependent over 18 years or older: $1,500/year Dependent under 18 years old: $750/year Example: A household with 1 sole-proprietor, a spouse, and one child under 18 years old would be eligible for 2 X $1,500 PLUS $750, for a total of $3,750. Self-employed individuals with arms length employees The business owner may have the same spending limit assigned to full-time staff. Corporations (incorporated businesses) Maximums for Employee/Shareholders must be "reasonable" (usually 10% of T4 income) Different maximums and benefits can apply to different Classes of Employees. All Employees in the Class must be included. Example: Executives $10,000/year, Managers $5,000/year, Employees $2,500/year Forfeiture of Funds - Any funds must be used within 12 months from the date of deposit, with a 12-month carry-forward available as an optional selection. Deposit are NEVER forfeited to the administrator, as this would be theft of the Employer's funds. Participation Rules A sole-proprietor can establish a PHSP with an Insurer only. If the sole-proprietor has arms-length employees, they can provide a Health Spending Account for Employees and the same benefits for themselves. 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 PHSP 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, and vitamins Drugs prescribed by a Licensed Practitioner and dispensed by a Registered Pharmacist are eligible. Vitamins and supplements (even if prescribed by a Licensed Medical Practitioner) are not an eligible