Sure it's new, and different and better, but how does it work?

A Medical Dental Spending Account (MDSA) is much like a health and dental bank account. Your employer deposits benefit dollars normally on a monthly basis into your MDSA up to the stated maximum per annum. Each time you submit a claim form, either for yourself or your dependents, you will be reimbursed for eligible expenses, up to the balance in your account. If a claim exceeds your account balance, the balance of the claim will be held until further employer contributions are received and will then be paid.

The MDSA provides you with complete control and responsibility for managing your basic personal health and dental expenses, and those of your dependents. Each Plan Year, your employer determines the amount of the employer contribution to your MDSA account for the next plan year.
 


Step by step - How the MDSA & Optional Benefits work:

1. Choose a Contribution Amount: The employer (or self-employed - incorporated; business owner) decides annually on the amount they want to contribute to each employee's MDSA account, utilizing the following contribution table:
   
   

   Net Annual Amount desired in the Employee's MDSA Monthly Contribution Amount** Tax Deductible Annual Cost to Employer per Employee** $500 $55.56 $666.72 $1,000 $111.11 $1,333.32 $1,500 $166.67 $2,000.04 $2,000 $222.22 $2,666.64 $3,000 $333.33 $3,999.96 $5,000 $555.56 $6,666.72 **Includes Administration and Claims payment and other costs.

   
   

Employer completes the Application and Master Agreement: The employer completes an MDSA Application & Agreement indicating the amount of monthly contribution and resulting net annual contribution to the employee's account.   Employee chooses Optional Benefits and completes the Application: The employee chooses from a variety of Optional Coverage including: - Extended Health Care more info - Extended Health Care Plus Dental Benefits more info - Accidental Death & Dismemberment Insurance more info - Critical Illness Insurance more info - Disability Insurance more info - Term or Permanent Life Insurance more info The employee completes an MDSA Application, and a Personal Health Declaration (PHD) if they wish to purchase the Optional Extended Health Care (EHC), or the EHC + Dental coverage. The employee pays 20% of each claim under the Optional SELECT coverage. The Optional coverage EHC & Dental premium rates are outlined below, and normally would be paid by employee, but can be paid by the employer, or cost shared, if desired. (Coverage under the Optional Benefits is subject to approval of the PHD by the insurer). Premium rates for the other Optional Benefits are outlined in the Application Form. Optional EHC Only Monthly Premium Rates*** Reimbursement Monthly Premiums 80% Single: $50.89 Couple: $69.08 Family: $79.62 ***Premiums and the 20% paid by the insured are eligible expenses that can be claimed from the MDSA.         Optional SELECT EHC + Dental Monthly Premium Rates*** Reimbursement Monthly Premiums 80% Single: $120.95 Couple: $173.23 Family: $203.53 ***Premiums and the 20% paid by the insured are eligible expenses that can be claimed from the MDSA.

4. Spending Account established: Monthly MDSA contributions and Optional Benefit premiums are billed each month by the Menuflex™ administrator, Alternative Benefit Solutions Inc. (ABS), and are collected via automatic bank withdrawals on the first Thursday of each month. ABS issues participants booklets, pay-direct cards and claim forms.
    
5. Employee submits any paper claims to ABS Inc: MDSA and EHC + Dental claims are submitted to ABS Inc, who will pay the MDSA claims up to the amount available in the employee's account on the date the claim is received, and will hold the balance until future monthly contributions are received. ABS will advise the participant of the balance in their MDSA with each payment, and will return any ineligible MDSA claims to the participant.
    
6. Optional EHC and Dental Deductible satisfied: ABS will pay all EHC + Dental claims once the individual's selected deductible has been satisfied via the MDSA claims. Employee utilizes their ESI Pay-Direct Card for drug and dental purchases, once the selected deductible has been satisfied. ABS will pay the EHC + Dental claims directly to the participant at the address on the claim form.

Additional Comments:
With a Menuflex™ MSDA Program, employers can essentially "freeze" their annual cost for health and dental benefits protection, and only adjust the contribution amount when they wish to do so and are able to afford it.

Employers participating in a traditional group benefits program may take into account their current monthly costs when considering the amount of contribution they can afford to make to the MDSA, e.g. a current monthly cost of $150.00 per month paid for by an employer would result in a net monthly MDSA contribution of $112.50 per month, or $1,350 per year. The employee then has complete flexibility in spending on health or dental services that qualify under the Income Tax Act, and is not constrained by the normal group plan design rules.

Employers who wish may offer even greater flexibility to employees by allowing them once per year in December to renegotiate their "compensation package", and under a letter of direction (contact us for a sample), have the employer direct a portion of their earnings in pre-tax dollars to their MDSA to meet anticipated unusual expenses in a given year, such as a large Orthodontia bill. This enables an employee to have an increased MDSA for that year and pay for the expense in pre-tax dollars.

More MDSA Advantages:
 An unusual feature is that in addition to expenses for your spouse and dependent children, expenses for blood relatives resident in your home and dependent on you for financial support, may also be claimed under the MDSA (e.g. mother, father).

 Expenses incurred for items such as semi-private hospital accommodation; private duty nursing, and Out-of-Canada emergency medical/hospital expenses would be claimed under the Optional EHC Program.

Tax Advantages:
 Medical and Dental expenses which may be claimed against the MDSA include any items that would qualify as a tax deductible medical expense under the Income Tax Act (please see section 118.2(2) and Interpretation Bulletin IT-519R2 for the list of Qualifying Medical Expenses. Self-employed should also refer to the CCRA Business & Professional Income Guide 2004 (T4002 (E) Rev.04), and are not reimbursed under any other private or government plan. This can include employee contributions to the Optional EHC premium, as that plan qualifies as a "Private Health Services Plan" under the Act. However, these premiums would not count towards satisfying the deductible under the Optional EHC Program.

There are a number of reasons why an MDSA is tax effective for you. If you paid for the expenses on your own, you would have to use expensive "after-tax" dollars. Your MDSA is sheltered from federal and provincial (except in Quebec) income tax. This means that when utilizing your MDSA to pay for eligible expenses, you are using less expensive "pre-tax" dollars. This results in extra savings for you.

Employer contributions to the MDSA do not constitute a taxable benefit under current Federal Tax legislation as they are being made to a "Private Health Services Plan" as defined in the Income Tax Act and associated regulations.

MDSA payments can cover a wide range of health and dental expenses. Your employer, who funds the MDSA, will determine annually, in advance, the amount of its contribution to the MDSA, and reserves the right to change or modify the overall Program in its sole discretion at any time.

In Quebec, employer contributions to any form of employee benefit result in a taxable benefit, regardless of whether the plan is insured, or self-insured by the employer.

Under the MDSA you are not constrained by plan limits as you are under a traditional group insurance program. You can spend the entire MDSA amount on one eligible medical or dental expense, (i.e. for a $1,000 dental crown or bridge). In this way, you get full control over your health care coverage and can direct your resources to meet your personal needs.

On the next page, see the Optional Benefits offered by Menuflex™ MDSA.