With a recent shift in workforce dynamics, employees are looking for greater choice and flexibility. The introduction of personal spending accounts offers a solution to this trend. The plan promotes employee wellness while limiting expenditures for the employer through a set allowance.
In today's competitive market, a personal spending account helps differentiate your business in enticing the top talent.
What is a Personal Spending Account (PSA)?
A Personal Spending Account is a taxable allowance designated for employees to receive additional wellbeing options beyond the traditional health and dental plan. These employee benefit plans are often referred to as Flexible Spending Accounts or Wellness Spending Accounts in Canada.
What is covered by a Personal Spending Account (PSA)?
There are a wide range of expenses covered by a Personal Spending Account. At Olympia Benefits, we provide categories for employers to choose from so that they can easily set up the plan. Here's a full list.
Since the plan is taxable, there is no prerequisite for what's covered. The employer can choose when it comes to wellness.
The options are practically limitless:
- Over-the-counter supplements
- Golf clubs
- Trail running shoes
- Bicycle helmet
- Personal Development
- Mental Health
- Hiking retreat
- Art therapy
How does a Personal Spending Account (PSA) work?
For example, let's look at a claim:
- The employer sets a yearly limit for their employees based on employee classifications
- An employee buys an annual gym membership for $200
- They choose to use a Personal Spending Account to make a claim for the $200
- The employer pays out the $200 claim and the employee is reimbursed $200 in taxable income
Setting up your Personal Spending Account (PSA)
- The employer designates an allowance/limit for each employee
- The employer funds the PSA account
- Employees do not have to spend all of the money available to them.
- Employees are reimbursed only for eligible expenses set by the PSA
What does 'taxable benefit' mean?
Personal Spending Accounts are a taxable allowance and contribute to an employee's yearly salary. Therefore, they must be included on their T4.
What's the point in having a Personal Spending Account (PSA)?
The PSA provides coverage beyond the traditional health plan and completes an employee benefits package.
Sign up for a Personal Spending Account (PSA)
Olympia benefits offers a PSA as an add-on to the HSA Group:
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