If you are a small business owner and have not yet heard of a Health Spending Account (or HSA), then it is time to learn of its absolute benefits, especially as it pertains to your bottom line.

With an HSA, Canadian business owners can save significantly on their health and dental expenses.

When you leave your employment to venture into your own business, you generally leave behind your “benefits” package and suddenly find yourself with no healthcare coverage. There is, however, a very simple, very cost-effective and exceptionally tax-effective solution – the HSA.

Most people are familiar with or have had “Group Insurance” and are aware how these programs work. These are, however, insurance programs and have limitations, restrictions and a high risk of fee increases each year. A typical group insurance program can cost a business owner $400 to $700 per month for family coverage, and this coverage generally has low limits for dental, prescription drugs, etc. and are unlikely to cover vision care, orthodontics, medical devices and certain therapies.

Under an HSA, all of these items can be covered at a fraction of the cost; in fact, the savings for small businesses in Canada under an HSA can be quite significant. Consider the following example:

Henry is an incorporated small business owner, based in Regina, SK. He has a spouse and two school-aged children. Henry earns $50,000 per year and his wife (an employee of the business) earns $45,000 per year. If their medical/dental expenses are $3,000 per year, they would have to pay this with “after-tax” dollars, therefore requiring gross income of approximately $4,500 per year.

Only a small portion of the medical expenses would be permitted as a tax credit on their personal taxes (and medical expenses must exceed 3% of taxable income before any qualifies for a tax credit).

On the other hand, let's consider if Henry elected to obtain group insurance and assume he paid $350 per month for coverage (equals $4,200 annually - more than the total medical expenses!) Although some of the medical expenses would be deductible by the business as employee benefits, a portion of the plan would be a taxable benefit for Henry, and the plan would have restrictions.

Now let’s assume Henry sets up an HSA for his family. By having the company contribute $250 per month to the HSA, Henry would effectively have $3,000 per year of “tax free” money to spend on virtually any medical expense. The company would gain the benefit of a 100% tax deductible amount of $3,000 per year. Since the money “belongs” to Henry, he may determine which expenses to submit for payment: orthodontics, eyeglasses, physiotherapy, prosthetics, laser eye correction… and the list goes on. Eliminating tax paid on your medical expenses is the core of a Health Spending Account.

Let’s take a look at the exact savings Henry earned from implementing an HSA:


Without HSA

With HSA

Gross Income



Annual HSA Contribution



HSA Admin Fees



Net Gross Income Before Tax



Tax Rate






Income After Tax



Medical Expenses



(Paid By HSA Before Tax)

CRA Medical Tax Benefit



Net Income



The table shows that Henry has saved $671 this year in medical expenses by simply using an HSA.

There are other great benefits to an HSA as well. You can establish an HSA for your employees, which is an excellent way to attract and retain talented team members. Moreover, business owners can set the contribution amount at varying levels based on employee classification: all employees do not have to receive an equal allotment.

Business owners can also add an insurance component to an HSA. If someone experiences a catastrophic event, the insurance will provide payment when you exceed the value of funds in an HSA. In addition, you can add travel insurance to your plan to provide a safeguard for when you are out of the country.

A great advantage of an HSA is that, completely unlike insurance, you can carry forward any unused values at the end of the year to the next year and not lose any of your money.


The Canadian Revenue Agency (CRA) completely endorses Health Spending Account Programs. So get yours today and give your family the medical peace of mind they deserve and start saving your hard-earned money! Setting up an HSA is simple and easy to do.

Interested in learning more about a Health Spending Account for your incorporated business in Canada?

The next generation of the Health Spending Account is now available to Canadian small business owners. Write off your medical expenses, get 100% coverage, and instant online claims.  There are no administration fees!

Discover how the Olympia Health Spending Account can be the ultimate match for your business by downloading our free guide: The Beginner's Guide to Health Spending Accounts to learn more.

Download Beginner's HSA Guide for an incorporated individual

Write off 100% of your medical expenses

Are you an incorporated business owner with no employees? Learn how to use a Health Spending Account to pay for your medical expenses through your corporation: 

Download the HSA Guide for Incorporated Individuals

Do you own a corporation with employees? Discover a tax deductible health and dental plan that has no premiums:

Download the HSA Guide for a Business with Staff

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