Personal Spending Accounts (PSAs) are a new way to add wellness options to your group benefits plan. Sometimes referred to as Health & Wellness Allowances, PSAs cover a wide range of wellness-related expenses and aim to cover expenses that enhance your life and lifestyle. New gym shoes, yoga classes or hobbies can all be covered with a PSA.
PSAs have been growing in popularity in recent years as the dynamics of the workforce shift and employees crave more choice and flexibility. Employees’ wants and needs are more varied than ever before, so offering a solution that lets employees decide what to spend their money on is worth considering.
What type of expenses are eligible under a PSA?
Coverage options under a PSA focus on overall wellbeing and are almost unlimited. Employers set up their PSA and decide what will and will not be covered. They can set as many (or as few) parameters as they wish!
For example, here’s a few of some of the most common PSA eligible expenses:
- Personal training and consultation
- Sports and gym/fitness centre memberships
- Child and elder care
- Hobby and general interest classes
- Education fees, tuition, and books
- Smoking cessation programs
- Safety equipment
- Transit and alternative transportation
- Legal services
- … and more!
How are they different from Fitness Allowances?
Some view PSAs as the 2.0 version of fitness allowances. Fitness allowances typically used to reimburse gym memberships. However the general consensus is that they are now so many different ways to stay fit. Many choose to purchase fitness equipment and exercise at home or join group classes like yoga, bootcamp and Zumba.
How are they different from Health Spending Accounts?
PSAs go beyond medical expenses recognized by the Canada Revenue Agency, providing reimbursements for any health and wellness related expense. While HSAs are tax exempt (in most provinces), wellness accounts have a much broader scope. Wellness accounts offer the flexibility to cover wellness options that work best for your plan members and their dependents.
Who manages a Personal Spending Account (PSA)?
Many businesses chose to administer their PSA in-house. Since coverage is so broad, there is very little margin of error. However some employers with limited internal resources chose to outsource the administration of these plans to an insurance provider or third party administrator. The benefits of outsourcing include :
- Access to electronic claims submission which are very convenient for employees (online portals, mobile applications, or even pre-funded credit cards)
- Confidentiality of individual claims
- Reduced administration and convenient reports for the employer