An Explanation of Taxes on Insurance Premiums in relation to HSAs

In the past, Health Spending Account claims were exempt from taxes.  Most provincial governments still do not tax Health Spending Account Claims but Ontario applies unique provincial taxes to the HSA product. 

Ontario PST, RST, HST and Health Spending Accounts

The Ontario government has its own unique tax treatment of "insurance premiums" and Health Spending Accounts.  There is a 2% special Premium tax and 8% RST on the claimed amount.  A 13% HST is also charged on the administration fee amount.

Example of a $1,000 claim in Ontario

1. HSA Deluxe / Plus / Basic

Premium tax: 2% or $20

RST: 8% or $80

No HST as there is no administration fee in these Olympia HSA Plans

Total: $1,100

2. HSA Group

[A] Claim: $1,000

[B] Olympia 8% administration fee: $80

[C] Subtotal: $1,080

[D] 2% Premium Tax on [C:] $21.60

[E] 13% HST on [B]: $10.40

[F] 8% RST on [A]: $80

[F] A+B+D+E = F = $1,192.00 

If you are residing in BC, Alberta, Saskatchewan and Manitoba, you do not have any additional taxes on claims.

One additional thing to note, those living in Quebec are ineligible for a Health Spending Account due to Quebec's laws and regulations. It essentially makes the HSA ineffective.

Get a comparison between the features and costs of each plan

If you are looking for just a Health Spending Account, then go for the Basic plan.

The Plus and Deluxe include exclusive features like catastrophic drug insurance and Dialogue virtual healthcare which are included in the yearly cost ($499 and $699 respectively).

See how much your business could save with a Health Spending Account:

Related Reading:

How does a Health Spending Account (HSA) work?

Common Misconceptions about HSA costs