5 Reasons Why a Health Spending Account (HSA) is Better Than Traditional Health Insurance
By Frontier Team•February 25, 2025•2 min read
A Health Spending Account (HSA) is better than traditional health insurance for most Canadian small businesses because it has no monthly premiums, covers a wider range of expenses, is 100% tax-deductible, has no deductibles or co-insurance, and lets you pay only for coverage you actually use. Here's how they compare side by side:
Comparison Table
| Feature | Health Spending Account (HSA) | Traditional Health Insurance |
|---|---|---|
| Premiums | No monthly premiums; clear and transparent fixed rates that include an administrative fee based on the claim and an annual account fee. | Costly monthly premiums which change annually based on risk assessments; making it difficult to predict costs. |
| Eligible Expenses | Covers a wider range of medical and dental expenses without restrictions, including pre-existing conditions. | Limited coverage with restrictions such as annual or lifetime caps and special authorizations; may exclude pre-existing conditions. |
| Complexity | Simple structure with 100% coverage up to your contribution limit; expenses are automatically tracked and updated. | Complicated policy guidelines detailing covered items, exclusions, deductibles, co-insurance, and reimbursement rates, leading to confusion over coverage. |
| Deductibles and Co-insurance | No deductibles or co-insurance requirements; no limits on treatments or visits. | Frequently includes deductibles and co-insurance, typically covering only 50%-80% of expenses, with limits on treatments and visits. |
| Flexible Coverage | Pay only for the coverage you want and need. | Plans are “one-size-fits-all” meaning you often pay for unused coverage. |
Related Resources
- Understanding Health Spending Accounts: A Practical Guide - Complete guide for business owners
- 7 Benefits of Using an HSA for Employee Health Benefits - More reasons to choose an HSA
- HSA Contribution Limits Explained - Know your annual limits
- HSA vs traditional health insurance comparison -- Full comparison for small businesses
- HSA eligible expenses -- Full 2026 list of covered expenses
- best HSA providers in Canada -- Provider comparison guide