PSAs popular option for workers

Eligible expenses for personal spending accounts run the gamut
By Amanda Silliker
|Canadian Payroll Reporter|Last Updated: 09/13/2012

Treadmills, sneakers, bicycle helmets, computer software and art classes are just some of the ways employees at the University of Calgary are spending the money in their wellness spending accounts.

University employees can receive, on average, between $500 to $1,000 in their accounts that they can spend on anything from fitness activities and sports equipment to computer products, professional development and personal interests, said Rhonda Pylychaty, director of total rewards at the university.

“There are specific expenses covered within each category and each category supports certain philosophies,” she said. “We look at the entire employee experience here because it is a large component of an individual’s life and, a lot of times, external factors can impact work life as well. It’s not just physical wellness, it’s also holistic wellness.”

Nearly one-half of the expenses claimed in the wellness spending accounts are under the fitness and sport equipment/activities categories for items such as gym memberships, skates or exercise classes. But since the 8,000-employee university has staff all over the world, employees are also enjoying the computer products category for items such as software upgrades and Internet service so they can stay connected, said Pylychaty.

And the personal interest category is also very popular.

“Our philosophy here is to support continuous learning and, oftentimes, a lot of work environments can be stressful. So, we support continuous learning through personal interests — that is an enabling quality to reduce the stress in our workforce,” she said.

Wellness spending accounts — also referred to as personal spending accounts — have gained traction in Canada over the past five or six years and are continuing to grow in popularity, especially among larger employers, said Karen Kesteris, director of marketing and product development at Green Shield Canada in Toronto.

“It’s a really good venue for employers who want to give their employees some latitude in terms of spending and how their dollars are allocated,” she said.

University of Calgary employees are given a flexible spending account where they have the option of allocating some or all of the funds to either a health spending account (HSA) — where eligible expenses are non-taxable but governed by the Canada Revenue Agency — or a wellness spending account, where employees pay the taxes on the funds they use and the employer sets the guidelines.

While the majority of personal spending accounts are based around wellness initiatives, employers can be as creative as they want when dictating what expenses will be covered. They can decide the list of eligible expenses on their own or get a standard list from their carrier — and it should be easily accessible for employees, said Kesteris.

“You can have accounts that focus on subsidies for public transit or we have one employer who’s included a bunch of green initiatives, so buying anything that’s green, down to green lightbulbs for your house — they will reimburse you,” she said. “But most of the accounts are focused on a specific area.”

Deciding which items are eligible and which are not may pose a challenge for employers. For example, quite a few employers include the Nintendo Wii on their list of eligible expenses for wellness spending accounts since it can be used for fitness games, but this decision sparked debate around the holiday season, said Kesteris.

“We paid for more Wiis in the month of December under the wellness program than we ever would have thought of and, in some cases, they were being used for things other than wellness. But, at the end of the day, it is a taxable account and the employer can put whatever they want in there,” she said.

And the employer has full election when choosing what amount to put into personal spending accounts, but the average is about $200 to $300 per employee, said Darwin Forbes, CEO and executive benefits advisor at Regency Advisors in Saskatoon. The specific amounts vary and are based on the classification of employees, he said.

Another challenge employers may face with personal spending accounts is around employee education, said Forbes. Employees will need to clearly understand the tax requirements associated with this account, otherwise there may be pushback, he said.

Offering flexible benefit plans with lots of choice will help employers meet the needs of a multigenerational workforce, said Kesteris.

“You’ve got about five different generations in the workplace right now and one size does not fit all when it comes to benefit plans. So, the more flexibility you can offer, the more different types of employees you’ll be able to attract — especially generation Y, who may not have the need right now for complicated dental or drug plans,” she said.

A personal spending account can also give employers an edge in recruitment because it allows them to show they are offering something unique and gives them another element to discuss from a total compensation standpoint, said Forbes.

“In the Alberta marketplace, this is something that has become an expected benefit for employees and those coming to the university or to an organization,” said Pylychaty. “It’s a decision point for them.”

A wellness spending account can also positively influence an employee’s performance at work, she said.

“It’s an enhancement to keep them healthy and in the workplace,” said Pylychaty. “Oftentimes, if they don’t have these supports, they may not be healthy and they may not be able to be at work.”

At the University of Calgary, the wellness spending account is seen as a benefit that adds significant value for the employer and it continues to be one of the most enjoyed employee benefits as well, she said.

“People look forward each year to allocating funds and understanding what their needs are that need to be met. And they do, ultimately, have the choice for the university to provide them with funding they can utilize in the most effective way for their own lifestyle.”

Employee Perks

What’s covered in PSAs?

Items commonly covered in personal spending accounts:

• fitness club memberships

• ski passes, lift tickets and race registrations

• personal trainers

• treadmills, exercise bikes

• tennis racquets, golf clubs

• safety equipment

• educational and personal development

• tuition fees for university, college

• language training

• smoking-cessation programs

• professional designation and membership fees

• hobby and general interest classes

• computer accessories

• alternative practitioners

• first aid and CPR training

• vitamins and supplements, including herbal products

• tax return preparation

• public transportation.

Source: Green Shield Canada

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