Hiveworks enables an incorporated business to set up a Health Spending Account (HSA) that allows the corporation to reimburse the business owner for eligible personal healthcare expenses. Structured as a Private Health Services Plan (PHSP), the Hiveworks HSA is designed to comply with CRA requirements and provide tax-efficient benefits.

Hiveworks acts as the plan administrator, managing setup, compliance, and claim reviews. Every submitted claim is assessed against CRA guidelines to ensure eligibility. The process is fully digital, streamlined, and built for incorporated professionals seeking a compliant solution.

‍

Definition of a PHSP

Per the CRA, a PHSP must:

• Cover only eligible medical expenses as defined under the Medical Expense Tax Credit (METC)
• Operate as a plan of insurance, meaning there is employer discretion and risk (not guaranteed reimbursement)
• Apply exclusively to employees and their dependants

CRA references:

• Private Health Services Plan definition
• Interpretation Bulletin IT‑339R2 - Meaning of “Private Health Services Plan”
• 2022 CALU Q10 - CRA Technical Interpretation (2022‑0928901C6)

‍

Eligibility for a Hiveworks HSA

Hiveworks is available to clients who meet all of the following:

• Incorporated business owner
• Receive T4 income (active employment is required)
• Have no arm’s length employees

The current plan supports only the business owner and their spouse or dependants. These individuals may be included as employees under CRA rules, provided they are legitimately employed and compensated.

If the corporation has additional arm’s length employees (non-family staff), Hiveworks’ current offering does not apply.

A Small Business PHSP is in development to accommodate multi-employee plans with appropriate per-employee allocations, class structures, and CRA-compliant administration.

‍

What Medical Expenses Can Be Claimed?

Only expenses eligible under CRA’s Medical Expense Tax Credit (METC).

Examples include:

• Dental and orthodontics
• Physiotherapy, chiropractic, massage
• Vision care, mental health, prescription drugs
• Medical equipment, lab work, diagnostic services
• Private health insurance premiums (if not already claimed)

CRA Eligibility links:

• Eligible medical expenses
• Authorized medical practitioners

‍

How Hiveworks Works

1. Plan Setup: The client selects a plan start date and agrees to Hiveworks’ service agreement
2. Expense Incurred: The business owner or dependant pays out-of-pocket for an eligible health expense
3. Claim Submitted: A receipt is uploaded through the Hiveworks portal
4. Claim Reviewed: Hiveworks screens it against CRA eligibility rules and approves or denies the claim
5. Employer Funds the Claim: Once approved, the business is invoiced for the claim amount
6. Reimbursement Issued: Hiveworks reimburses the employee to their personal account

Further details on how it works.

‍

Compliance Controls

Hiveworks is structured to meet the CRA’s definition of a Private Health Services Plan (PHSP), including the requirement that the plan function as a true plan of insurance with employer-level discretion and risk. The platform enforces the following controls:

• $15,000 Annual Reimbursement Cap
  Clients define their annual reimbursement limit at account setup, up to a maximum of $15,000. This limit cannot be exceeded, and resets each year.
• Plan Information Is Cannot be Modified After Activation
  Clients cannot modify the plan start date, corporation name, and other personal details once the plan is active. The annual limit is also set for the year however can be set each year prior to plan renewal. Changes to the corporation name require supporting documentation and are subject to review and approval by Hiveworks.
• Only Expenses Incurred After Plan Start Date Are Eligible
  No retroactive claims are allowed. All reimbursed expenses must be dated on or after the client’s confirmed plan start date.
• Eligibility Confirmations at Onboarding
  Clients must confirm that they are incorporated in Canada, earn T4 income, and have no arm’s length employees. These declarations form the legal basis for PHSP eligibility.
• Claim-by-Claim Review with Receipt Uploads
  Each claim is manually reviewed against CRA’s medical eligibility rules. Receipts are required for all expenses. Claims will be approved or denied based on eligibility.

‍

Annual Limits

Each year, the plan owner must define their annual limit. The maximum annual limit is $15,000. This structure:

• Maintains alignment with CRA’s “plan of insurance” requirement
• Reflects reasonable annual medical and dental costs for the owner and dependants

The owner‑set limit must be reasonable in relation to income and employment purpose. Industry guidance suggests it should fall within 10-15% of the employee’s earnings, ensuring it aligns with what a comparably paid employee might reasonably receive. A limit that significantly exceeds this range could be viewed by CRA as a taxable shareholder benefit rather than a genuine employee benefit.

We enforce the $15,000 cap because:

• It aligns with widely recognized standards in the HSA/PHSP industry
• It helps the plan maintain audit-readiness and employer control over total cost exposure

The limit resets annually, and it can be aligned with the corporation’s fiscal year for convenience.

‍

Eligible Dependants

CRA defines an eligible dependant for medical expense purposes as:

The plan provides coverage only to the employee, the employee’s spouse or common law partner, or any member of the employee’s household with whom the employee is connected by blood relationship, marriage or adoption
Source: CRA - Who is an eligible dependant

Hiveworks supports a focused definition:

• Spouse (married or common-law)
• Children who are:
  • Under 21, or
  • Under 25 and enrolled in full-time post-secondary education, or
  • Any age if physically or mentally unable to support themselves
• Dependants must live in the same primary household as the planholder

‍

Coordination with a Spouse who already has a Benefits Plan

Hiveworks can still be used to reimburse:

• Out-of-pocket portions not covered by the spouse’s group plan
• Excluded or capped services such as massage, physio, or orthodontics
• Premiums paid for the group plan (if not already claimed elsewhere)

‍

CRA excerpt on insurance premiums:

Premiums paid to private health services plans - including medical, dental, and hospitalization plans - can be claimed as a medical expense, as long as 90% or more of the premiums paid under the plan are for eligible medical expenses.
Source: CRA - Premiums paid to private health services plans

‍

Still have questions? Contact us.

‍

Interested in partnering with Hiveworks? Connect with us.