What's Covered?

Frequently Asked Questions

How To Apply

Q:

What is a "Medical & Dental Spending Account (MDSA)"?

A:

An MDSA is a "Health Spending Account" as permitted under the Income Tax Act that can be compared to a bank account specifically for future health or dental claims. When medical or dental expenses are incurred by the employee, or dependents, a claim is submitted to the Menuflex™ Administrator for reimbursement. Benefits received under the MDSA are free of income tax under current legislation.

A "Health Spending Account" is a vehicle permitted under the Income Tax Act as a "private health services plan" (IT339R2) that enables employers (including the self-employed) to cover participants' eligible medical and dental expenses as defined under Section 118.2 (2) of the Act. The net funds contributed after the administration fee may be used to pay for any eligible medical or dental expense. The MDSA operates on a "Plan Year", i.e. for 12 months from the effective date.

Q:

Why is a "Medical & Dental Spending Account (MDSA)" included?

A:

An 'MDSA" is simply an alternative way of providing basic health benefits and certain health benefits not covered by the typical insurance plan, and particularly dental benefits, but with greater flexibility for the employee, and a fixed cost that does not escalate each year unless the employer wishes to increase the annual contribution.

Q:

What is the cost?

A:

You determine how much to contribute based on your needs and those of the eligible employees. The minimum monthly contribution for the Menuflex™ MDSA is $55.56 per month and this provides a net annual MDSA account of $500 to be spent on the participant's eligible expenses. The following illustrates the monthly cost of varying annual MDSA accounts:


$500/annum =   $55.56 per month
$750/annum =   $83.33 per month
$1,000/annum = $111.11 per month
$1,500/annum = $166.67 per month
$2,000/annum = $222.22 per month
$5000/annum =  $555.56 per month

The monthly contributions include the administration and claims payment fees and related taxes.
 

Q:

What if the MDSA Contributions are not enough?

A:

Participants may purchase Supplementary Extended Health Care Benefit protection of up to $25,000 per person per policy year (subject to limits on specific benefits) to "top-up" the MDSA. It provides 80% reimbursement of eligible expenses up to the specific limits by benefit. It includes $1M Out-of-Province / Country Emergency Medical/Hospital for trips of up to 30 days duration as many times per year as desired. Alternatively, you may purchase the EHC Benefit plus a Basic Dental Benefits Plan providing 80% reimbursement up to $1,500 per person per annum. The Policy Year starts from the effective date of coverage following approval by the insurer Echelon General.

Q:

Is A Medical Required?

A:

No, the MDSA does not require any health evidence. For the Supplementary Health coverage a Personal Health Declaration is completed by the applicant for himself and all eligible dependents for approval by the insurer. Based on the medical information including the medications currently being utilized the insurer will decide on whether coverage can be granted on a standard basis, or if a "surcharge" is required in order to provide full coverage for pre-existing conditions. The insurer of course reserves the right to decline coverage based on their evaluation of the risk, however every attempt is made to extend coverage at the appropriate rate.

Q:

What happens to my unused MDSA contributions?

A:

Unused contributions from the first plan year are not lost – they carry forward to the second plan year, and if not used by the end of that plan year are forfeited back to the contributing employer.

Q:

How safe are my contributions?

A:

Monthly contributions are collected by Alternative Benefit Solutions Inc. (ABS) and are held in a Trust Account until required to make MDSA claim payments.

Q:

Who pays the MDSA and Supplementary coverage claims?

A:

ABS pays both the MDSA and Supplementary coverage claims. The Drug claims can be handled via the ESI pay-direct card. Other claims require a paper claim form be submitted to ABS.

Q:

How do the MDSA and Supplementary EHC work together?

A:

Your initial claims for items like prescription drugs, physiotherapy, and chiropractic services are claimed against your MDSA and are reimbursed at 80% in accordance with the SELECT EHC benefit plan up to the maximums of that policy. The deductible does not apply to the Out-of-Province or Country benefit which is reimbursed at 100% (after a $100 deductible per claim) up to $1M of eligible expenses. This coverage is provided by Royal & Sun Alliance Insurance Company through E.F.T.S.

The following chart illustrates how the MDSA and deductible under the EHC work together.
 

Q:

Will I be able to claim the full annual amount of my MDSA even though contributions are being made monthly?

A:

No, for Individuals and the Self-employed, MDSA claims will be paid up to the amount in your account.

Q:

What expenses may be claimed against the MDSA?

A:

This is a partial list of Eligible Medical & Dental Expenses that may be claimed from the Health Spending Account (MDSA):

Acupuncture	Dental Implants	Naturopathic Products**
Artificial Limbs.	Dental Treatment	Nursing Homes
Athletic Therapy*	Dental Whitening	Optometrist
Attendant Care	Dentures	Orthopedic Shoes
Birth Control Pills**	Orthodontics	Oxygen & Equipment
Botox Treatments*	Dermatologist Fees	Optician
Chiropractor	Fertility Treatments	Registered Masseur
Chiropodist	Hair Replacement	Skin Care
Chinese Medicine*	Hydrotherapy**	Psychologist
Contact Lenses**	Laser Eye Surgery	Physiotherapist
Contraceptive Devices**	Laser Hair Removal*	Podiatrist
Cosmetic Surgery	Vitamins**	Prescription Drugs
Crowns & Bridgework	Therapy Equipment	Psychotherapy*
X-rays	Wheelchairs	Psychiatrist
Vein Removal	Viagara, Celias, Levitra	& more per Section 118.2 (2) of Income Tax Act

* Must be performed by a licensed medical practitioner
** Must be prescribed by a licensed medical practitioner and dispensed by a licensed pharmacist or licensed medical practitioner as part of their medical services.
E&O Excepted - Alternative Benefit Solutions Inc., 2005
 

Q:

Why was the new Menuflex™ MDSA Benefits Program developed?

A:

It was in response to the expressed concerns of employers for cost controlled benefits, particularly health and dental benefits where costs are escalating from 15-30% per annum year after year.

Q:

What are the key differences of the Employer Program when compared to those currently offered to employers by insurers?

A:

First, the very small to medium sized employer has not been a key target market for group insurers. Insurers have in the main focused on the large employer market of 250 or more employees or those with annual premiums in excess of $100,000 per annum. Secondly, insurers have not been prepared to offer "flex benefits" to these small employers.

Q:

Are there other advantages for the employer?

A:

Yes, the employer can define the eligible group, e.g. non-union staff or managers only, if desired, and can vary the employer contribution to the MDSA by class of employee.

Q:

What if an employee's health or dental claims exceed the amount available in their MDSA?

A:

Certain claims will be eligible for reimbursement under the Optional Extended Health Care Program available to all employees. Such expenses include semi-private hospital; private-duty nursing; prescription drug expenses; Out-of-Canada Emergency Hospital/Medical Expenses etc.

For those basic health and dental claims not eligible for the EHC coverage, and which are in excess of the MDSA allocation, the employee is responsible for payment of the excess amount.

Q:

Why do employees have to become involved in the management of their own health and dental expenses?

A:

Employers can no longer afford to provide unlimited benefits, which are subject to annual cost escalation based on the group's claims experience and insurer "inflation" factors. Rather than eliminate benefits entirely, or pass along the increased cost to all employees, some of whom will not have any, or at best, minimal health and dental claims, employers have to restructure their approach to the provision of benefits. Employees must therefore, become personally involved in the management of their own health, and related health care expenses.

Q:

Are there other advantages to the Medical & Dental Spending Account approach to the provision of health and dental benefits?

A:

Yes, these include:

1. Broader coverage than is often available under most group insurance plans, e.g. expenses are reimbursed at 100%, there are no deductibles, and coverage can include anything permitted by the Income Tax Act Section 118.2(1) and regulations pertaining to a "private health service plan."
    
2. By arranging major dental treatment over two plan years, an employee can ensure his/her MDSA will cover the expenses.
    
3. Benefits received from the MDSA are not a taxable benefit to employees.(except in Quebec)
    
4. The definition of eligible dependents is much broader than under insurance plans, e.g. an employee caring for an elderly parent or disabled sibling, can claim their medical/dental expenses.
    
5. As the provincial Medicare plans are revised by cutting back on covered items, these can be handled through the MDSA.

Q:

Why is this approach to benefits appropriate at this time?

A:

Employers, both private and public across Canada, are facing new economic realities, which they must address by reducing operating costs. This can be achieved at least in part by the introduction of a "defined contribution" approach to benefits where the employer can fix costs and not face compounding annual rate increases. At the same time, this approach responds more appropriately to changing employee needs on a personal basis. By taking the flexible approach, employers can control costs while providing greater coverage and flexibility to employees.

What's Covered?

How To Apply