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
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.