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What is a Standalone® Spending Account?

By: Benefits by Design | Wednesday February 8, 2017

Updated : Thursday February 15, 2024

Blue Piggy Bank with a hand placing coins in | Spending Account | Benefits by Design

Short answer? Standalone can pretty much be whatever you want it to be.

Employers can choose to incorporate a variety of Spending Account options to create a comprehensive solution that provides cost-containment, flexibility, and employee choice.

What is a Spending Account?

Think of a Spending Account like a bank account. It’s an account full of money, the amount being determined by the employer, for employees to spend on eligible expenses. The amounts reset with each new benefit year, and the dollar amount can be accessible to employees on an annual, semi-annual, quarterly, or monthly basis.

Spending Accounts provide employees with the ability to choose where to use their benefits dollars. It also provides cost-containment to employers, who will be able to accurately budget for their total benefits spend.

For example, an employer with five employees, gives each employee $1,000 annually in total Spending Accounts options. This means the employer will have a maximum benefits spend of $5,000/year (plus any applicable taxes and administration fees).

There are a few different types of Standalone Spending Accounts: a Health Care Spending Account (HCSA), a Wellness Spending Account (WSA), or a combination of the two.

Health Care Spending Account (HCSA)

A Health Care Spending Account (HCSA) is a tax-effective way for employers to cover employees for eligible health and dental expenses. Employers determine the amount they would like to spend per employee and whether employees can carry over unused funds as part of their plan design. Employees pay for products and services themselves then submit expenses for reimbursement. Best of all, reimbursements are tax-free!

Typical expenses covered by an HCSA include glasses, massage therapy, dental services, and prescription drugs plus much, much more!*

HCSAs are regulated by the Canada Revenue Agency (CRA), who determine what is eligible for claiming. You view the full list of eligible expenses on the CRA website.

Wellness Spending Account (WSA)

Looking for a way to reward employees for living, healthy, active lives? A Wellness Spending Account (WSA), sometimes known as a Personal Spending Account (PSA), allows employers to reimburse employees for expenses related to personal wellness. Reimbursements to employees are a taxable benefit.

Typical wellness expenses include: gym memberships, personal training, vitamins – think anything that helps employees be healthy and well! As the employer, you decide what you cover.

Combination Spending Account

Looking for additional ways to offer a choice to your employees? Combine the powers of an HCSA and WSA into a Combination Spending Account.

Employers can allocate a set amount of money for employees who can then determine how much of that total will go into each Spending Account. This option provides even more employee choice and flexibility!

For example, if an employer offers $1,000 in a Combination Spending Account, each employee will be able to determine how much of that $1,000 goes in each account.

So if an employee really values their HCSA and the health and dental coverage it provides, they could elect to put a larger portion of their $1,000 allotment in that account, rather than their WSA. Alternatively, if an employee valued their WSA coverage and the extra perks and benefits it provides, they might choose to put more money into that account! It’s totally up to them.

Why Would Employers Choose a Spending Account Over Traditional Benefits?

Great question!

Employers can actually have the best of both worlds by combining a Spending Account with their traditional, fully insured benefits.

This combination creates an incredibly comprehensive plan. It brings employees all the benefits of a fully-insured plan, such as Life and Disability Insurance, while providing flexibility and choice through a Spending Account.

Almost Any Business is Eligible for Standalone

One final advantage for Standalone Spending Accounts is the very minimal eligibility requirements.

In fact, the only requirement is that your business be incorporated!

This makes it an excellent option for businesses who may not yet qualify for traditional, fully-insured plans which often have more stringent eligibility requirements, including the number of employees, amount of premium being collected, hours worked by employees, and more.

All Standalone Spending Accounts include:

A pay-as-you-claim model with no monthly invoice — employers pay only for what is used by employees;
A completely paperless system from claim to reimbursement — save yourself the hassle of paperwork, streamline processes, and reduce the impact on the environment;
Access to a secure, easy-to-use platform empowering employers and employees with everything they need to know about their Standalone Spending Account, include an option for mobile claim submission;
Fast claims reimbursement, so employees aren’t out-of-pocket for long;
The same great BBD customer service!