Starting point for smaller employers
For employers not ready for a full insured plan, an HSA can be a simple way to offer meaningful health and dental support.
Health Spending Accounts
Flexible health spending with a predictable budget.
A Health Spending Account can provide employees with flexible, tax-free reimbursement for eligible health and dental expenses while giving the employer control over the annual allowance.
It can work on its own for a smaller team, or alongside a traditional benefits plan as a flexible top-up.
Flexible layer beside a group plan
For employers with traditional benefits already in place, an HSA can cover gaps, add flexibility, and reduce pressure to insure every small expense.
Cost control
The employer decides the allowance in advance. That makes the exposure clearer than an open-ended claims arrangement.
Calculator
Compare paying personally vs. reimbursing through an HSA.
This calculator estimates the difference between paying eligible medical expenses personally with after-tax income and reimbursing them through an HSA.
Used to estimate the personal income required to pay the same expense personally.
Used to estimate the taxable compensation required to deliver similar after-tax value.
HSA cost assumption: 10% administration fee plus applicable taxes, estimated at 21.5% of claims.
Estimated cost difference$0
Compared with paying eligible expenses personally using after-tax income.
Paid personally
Using after-tax personal income
Personal income needed before tax$0
Estimated tax paid$0
Net medical spend$0
Through HSA
Business reimburses eligible expenses through an HSA
Eligible expenses reimbursed$0
Estimated HSA fees/taxes$0
Estimated total HSA cost$0
Taxable benefit to employee$0*
To pay the same eligible expenses personally, the income needed before tax is shown above.
Through an HSA, the business reimburses eligible expenses and pays estimated fees and taxes.
Why employers use HSAs
Pay only when eligible claims are made.Give employees flexible, tax-free health spending when set up properly.Set a defined budget instead of open-ended premium increases.
*When set up properly. For planning purposes only. HSA rules, shareholder treatment, eligibility, and tax rates can vary. This is not tax advice or a final quote.
FAQ
Health Spending Account questions.
Who should use an HSA?
An HSA can work well for incorporated business owners, professionals, and employers who want a flexible way to reimburse eligible health and dental expenses for themselves, their employees, or both.
What expenses are eligible?
Eligible expenses generally follow the Canada Revenue Agency's medical expense rules. This can include items such as prescriptions, dental care, vision care, physiotherapy, mental health services, and medical devices, depending on the expense and supporting documentation required.
Is this taxable to employees?
When set up properly, HSA reimbursements are non-taxable to employees and deductible to the business.
Does this replace insurance?
Sometimes. For smaller teams, an HSA can be a simple standalone benefit. For employers with an insured benefits plan, it often works well as a flexible top-up for expenses that are not fully covered.
Does the employer control the budget?
Yes. The employer sets the allowance, so the annual exposure is easier to understand.