HSA vs. WSA: Why Smart Employers Are Offering Both

The New Standard in Employee Benefits

As an HR manager or business owner, you're constantly balancing cost and care. On one hand, you want to offer competitive employee benefits that attract and retain top talent. On the other, you need to ensure your budget doesn’t spiral out of control. The good news? There’s a smarter way to enhance your benefits offering: combining Health Spending Accounts (HSAs) and Wellness Spending Accounts (WSAs).

While both accounts are tax-effective tools that support employee well-being, they serve different purposes. And together, they can complement traditional insured benefits to create a robust and responsive benefits strategy.

What Is an HSA (Health Spending Account)?

A Health Spending Account is a non-taxable benefit that reimburses employees for eligible health and dental expenses. Think of it as a mini, personalized insurance plan that lets employees pay for:

Prescription drugs
Paramedical services (e.g. massage, physio)
Dental work
Vision care
Medical devices and more

All expenses must meet the CRA's guidelines for medical expenses. The key benefit? Employees don’t pay tax on the reimbursements, and you as the employer get to write them off as a business expense.

It’s a win-win.

What Is a WSA (Wellness Spending Account)?

A Wellness Spending Account is a taxable benefit designed to support the broader well-being of your employees. It covers a wider range of expenses not allowed under an HSA, such as:

Gym memberships
Personal development courses
Fitness equipment
Nutrition counselling
Mental wellness apps
Family care or childcare support

Though the reimbursements are taxable to the employee, they offer incredible value in terms of flexibility and personalization.

HSA vs. WSA: Key Differences

Feature	HSA	WSA
Taxable to employee	No	Yes
CRA eligibility required	Yes	No
Covers medical expenses	Yes	No
Covers lifestyle/wellness	No	Yes
Customizable by employer	Yes	Yes

Why Offer Both?

Offering just one of these accounts is a great start. But offering both? That’s how you build a truly holistic benefits plan that your team will actually use and appreciate. Here's why:

1. Personalization = Higher Engagement

Everyone’s needs are different. One employee might need help covering orthodontics for their child, while another might want support for marathon training. By offering both HSAs and WSAs, you give your employees the freedom to choose what benefits matter most to them.

2. Enhanced Recruitment & Retention

In today’s competitive hiring market, a flexible benefits package can be the difference between a candidate accepting your offer or going to a competitor.

3. Budget Control & Cost Containment

With fixed employer contributions, you decide how much to fund each account annually. There are no surprises or premium increases. This flexibility complements traditional insured plans by allowing you to allocate your resources more strategically.

4. Supports Total Employee Well-Being

HSAs support physical health, while WSAs can support mental, emotional, and even financial wellness. Together with traditional insurance offerings, they help reduce burnout, absenteeism, and stress—boosting your team's overall productivity.

How Bayview Helps Build Smart, Flexible Plans

At Bayview, we work closely with Canadian employers to design benefits packages that make sense. We don’t push products—we find solutions. That includes helping you:

Set up and administer HSAs and WSAs
Determine optimal funding levels based on your budget
Educate employees on how to use their accounts
Benchmark your benefits plan against industry standards
Avoid common pitfalls (like taxable benefit misunderstandings or underutilized accounts)

Read about the top 5 mistakes employers make with their benefits plans so you can avoid them.

Pro Tip: Pairing HSAs and WSAs With Traditional Coverage

HSAs and WSAs aren’t replacements for traditional group insurance—they’re powerful complements. You can keep core coverage (e.g. life, AD&D, critical illness) and use HSAs and WSAs to:

Reduce pressure on extended health and dental plans
Cover co-pays or out-of-pocket expenses
Provide a "lifestyle" component that extends beyond medical needs

This layered approach allows you to offer comprehensive benefits while maintaining cost predictability and adaptability.

Real-World Example: A Balanced Benefits Plan in Action

One of our clients, a 25-person digital marketing firm, was looking to make their benefits more relevant and cost-effective. By introducing HSAs and WSAs alongside their existing insured plan:

Their total benefits costs were optimized
Employee satisfaction with benefits rose by over 40%
Usage increased as staff appreciated the flexibility

This isn’t just theory—it’s a better way to do benefits.

Let’s Build the Right Plan for Your Team

Every company is different. Whether you’re a five-person startup or a 100-employee manufacturing business, we’ll help you build a plan that reflects your goals, your budget, and your people.

Interested in learning more about HSAs, WSAs, or customized benefits planning?

Contact Bayview Financial Group today. We’re here to help you turn your benefits plan into your business’s competitive edge.

Final Thought:

HSAs take care of your employees’ health. WSAs take care of their lives. Traditional insured plans provide essential protection. Offering all three takes care of your business—comprehensively.