What is an HSA?
Understanding Health Spending Accounts
Healthcare coverage simplified
What is a Health Spending Account?
A Health Spending Account (HSA) is a tax-free benefit your corporation sets up and offers you as part of your employment contract, to cover personal medical expenses.
When structured properly, it qualifies as a Private Health Services Plan (PHSP) under CRA rules. That means every approved reimbursement is tax-free to employees and fully deductible to the business.
This is a self-insured plan. Your business acts as the plan sponsor, and participants (you and your employees) are the plan members.
You choose an annual limit, up to $15,000, and the full amount is available across all eligible health and dental categories.
There are no sub-limits for things like dental, massage, or vision. If a claim meets CRA eligibility rules, it’s covered.
There are no monthly premiums and no locked-in funds. You only send us money when a claim is approved, aside from the flat annual platform fee.
Hiveworks handles all aspects of your plan administration.
Who Can Benefit from an HSA?
Hiveworks is built for Canadian incorporated businesses of all sizes — from independent owners to teams with employees. An HSA gives you control, flexibility, and tax efficiency.
Incorporated Individuals
Single-owner incorporated businesses with no arm’s-length employees. Common for professionals like doctors, consultants, accountants, and tradespeople who pay themselves a T4 salary.
Small & Mid-Sized Businesses
Employers with one or more arm’s-length employees who want to offer flexible, tax-free health and dental coverage without the cost or restrictions of group insurance.
Professional Corporations
Incorporated medical, legal, or technical practices where the owner and possibly a small administrative team are on payroll.
Family-Run Businesses
Owner-managed companies where a spouse or dependants are employed and receive T4 income, allowing compliant family coverage under the HSA.
What's Covered?
Health Practitioners
You can claim visits to a wide range of licensed health and dental professionals. Some of the most common being:
Dentist / Orthodontist
Registered Massage Therapist
Chiropractor
Optometrist
Physiotherapist
Psychologist / Psychotherapist
Over 50 practitioner types are covered and eligibility varies by province
Medical Expenses
Beyond health services, your HSA also covers a wide range of eligible products, procedures, and medical equipment. Some of the most common being:
Prescription Drugs and Medications
Orthodontic Work / Braces
Vision (prescription eyeglasses, contact lenses)
Orthopaedic Shoes and Inserts
CPAP Machines and Breathing Devices
Hearing Aids and Assistive Listening Devices
Mobility Aids
Laser Eye Surgery
Premiums Paid to Group Health or Dental Plans
If you or your spouse have existing health and dental coverage, the premiums you are paying for those plans can be expensed to your HSA
Over 100 medical expenses are eligible under CRA rules
Only expenses incurred after your plan’s start date can be reimbursed so don't delay
Start with an HSA
Hiveworks enables small businesses to offer flexible, tax-free coverage today - and an HSA can fit seamlessly alongside group benefits if you decide to add them in the future.
Group Benefits
Hiveworks HSA
Cost Structure
Financial Risk
Value
Flexibility
Scalability
Coverage Scope
Eligibility for a Hiveworks HSA
To open a Hiveworks Health Spending Account you must meet this criteria.
Incorporated in Canada (excluding QC)
The plan must be sponsored by a legal Canadian corporation.
Pays T4 income to one or more arm’s-length employees
Employees must receive T4 income to establish a valid employer-employee relationship for CRA purposes.
The HSA is structured as a formal employment benefit
The plan must be offered as part of the employee’s compensation package and apply uniformly within each employee class.
Sets and maintains reasonable annual limits by class
Annual reimbursement limits must be defined by employee class (for example, Owners, Managers, Associates) and remain consistent for all employees within that class. Limits should align with compensation levels and job roles, typically within 10–15% of salary, to ensure the benefit is fair and compliant.
Optional: Spouse and Dependants Eligibility
Your spouse or common-law partner can also be covered under your HSA, along with children under 21, children under 25 who are enrolled in full-time post-secondary education, and children of any age who are physically or mentally dependent. All must live in the same household as you.
Incorporated in Canada (excluding QC)
The plan must be sponsored by a legal Canadian corporation.
Pays a T4 salary from the business
T4 income clearly shows that you're an employee of your corporation. This helps establish the employer-employee relationship that is expected.
The HSA is part of your employee compensation
It must be set up as a formal employment benefit, not a shareholder perk.
No arm’s length employees
Only your spouse or dependants can be employed in the business. (A small business plan is coming soon.)
You set a reasonable annual limit
The amount must reflect your compensation and job role, to a maximum of $15,000. Industry guidance suggests the benefit should fall within 10-15% of your salary and be consistent with what a comparably paid employee in another corporation might receive.
Optional: Spouse and Dependants Eligibility
Your spouse or common-law partner can also be covered under your HSA, along with children under 21, children under 25 who are enrolled in full-time post-secondary education, and children of any age who are physically or mentally dependent. All must live in the same household as you.
FAQs
More Questions? See our FAQ section or Contact Us.
Is this different from regular insurance?
Yes. There’s no monthly premium and strict coverage plan. You pay out of pocket, submit a receipt, and your corporation reimburses you. You only fund it when you use it.
Do I need to pre-fund the HSA?
No. You don’t send money ahead of time. You only transfer funds from your corporation once a claim is approved.
What if my spouse already has benefits?
Even if your spouse has a health plan through work, you’re still likely paying out of pocket. Premiums are almost always deducted from their paycheque, most plans don’t fully cover everything and also have category maximums. With a Hiveworks HSA, you can:
Reimburse the health and dental portion of premiums your spouse pays
Claim the uncovered 10 to 30 percent or portion above the maximum limit of eligible expenses
Cover health costs their plan doesn’t include at all, like orthotics, therapy, or braces
Your HSA doesn’t replace their coverage. It fills in the gaps. See our article on how our HSA can work with spousal benefits.
Are braces / orthodontics an eligible expense?
Yes, orthodontic work like braces are eligible as long as it’s for medical reasons and performed by a licensed medical practitioner.
Are massages an eligible expense?
Yes. Massages are eligible if they’re performed by a Registered Massage Therapist (RMT) in the following provinces: Ontario, British Columbia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Saskatchewan.
How do I share this with my accountant?
Simple. Just send them this technical guide. It covers how the Hiveworks HSA works and how it complies with CRA eligibility rules.
.svg){kind=small}