Health Spending Accounts (HSA): brand new topic!

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worryfreeinvestor
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Health Spending Accounts (HSA): brand new topic!

Post by worryfreeinvestor » Thu Jul 07, 2005 11:57 am

In 2003, President Bush signed the Medicare Modernization Act, which allowed working-age folks to get out of PPOs and HMOs by purchasing a high-deductible health insurance plan and also opening up a Health Spending Account, which allows up to approx. $5125 annual contributions. One may pay medical bills out of this HSA. Credit balances roll over until retirement on a tax deferred basis like a 401(k) or IRA.

Does anybody know what I should do with my HSA if I move back to Canada? (Has CCRA an opinion?)

(I'll give two shillings to anyone who can give evidence of having considered this question before!)

Norbert Schlenker
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Post by Norbert Schlenker » Thu Jul 07, 2005 2:29 pm

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by worryfreeinvestor</i>
Does anybody know what I should do with my HSA if I move back to Canada? (Has CCRA an opinion?)<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
No opinion that I know of. Call or write the International Tax Services office in Ottawa to ask the question.

You should be aggressive in my view. Article XXI, paragraph 2(a) would seem to exempt such a plan from any Canadian taxation.

nelsona
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Post by nelsona » Thu Jul 07, 2005 4:53 pm

2 points, the HSA contribution limit is based on the 'deductible of your company's HSA plan, which may not be $5000. My firm's is only $1250, so there is little possibility for me to rack up big savings using HSAs, even if my family was perfectly healthy.


XXI 2(a) only covers dividends and interest, so cap gains (these HSAs can hold any kind of investment) would not be covered by this Clause.

<i>nelsona non grata... and non pro</i>

worryfreeinvestor
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Post by worryfreeinvestor » Mon Jul 11, 2005 11:27 am

Thanks, I was aware that the contribution is related to the deductible of the policy, but I wanted to keep my post simple because it's not the $ amount that concerns me but the tax treatment in Canada.

nelsona
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Post by nelsona » Mon Jul 11, 2005 8:15 pm

My posts are read by dozens of people, just like to cover as many points as possible, in what is, thankfully, a new topic.

<i>nelsona non grata... and non pro</i>

worryfreeinvestor
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Location: Seattle, WA

Post by worryfreeinvestor » Thu Jul 14, 2005 1:18 am

Spoke to a chap at CRA Int'l Tax Svcs in Ottawa - just to change my mailing address, and I asked him. He had never heard of an HSA so he searched for few minutes on his database and came up with a blank. I think I'll invest in my HSA and let it go for now with CRA. I don't know how long I'll be in the US, but I can't see much downside. At least I'll be able to shelter in the US for as long as I'm here.

nelsona
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Post by nelsona » Thu Jul 14, 2005 2:04 am

For a healthy individual, with no kids, HSA is really the way to go, cross-border issues aside.

If there is a health condition, they may not be so good.

In other words, one should fund HSA if they don't foresee using it all up every year, otherwise their company's 'normal' PPO is liklely better.



<i>nelsona non grata... and non pro</i>

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