How Does a Health Spending Account Work in Canada?

By Frontier Team•February 10, 2026•3 min read

A Health Spending Account in Canada works like this: your business sets a health budget, employees pay for medical expenses out of pocket, submit a photo of the receipt, and get reimbursed tax-free — usually within 24-48 hours. The business deducts the full amount as a business expense. No premiums, no complicated paperwork, no waiting for approval.

Here's the process broken down into five simple steps.

Step 1: Your Business Sets a Budget

You choose a monthly or annual health benefit amount for each employee. Most small businesses start with $50 to $150 per person per month. You can set different amounts for different groups — for example, a higher limit for senior staff and a lower one for part-time employees.

There are no upfront costs. You only pay when someone actually submits a claim, so nothing is wasted.

Step 2: An Employee Has a Medical Expense

Someone on your team visits the dentist, picks up a prescription, gets new glasses, books a physio session, or sees a therapist. Anything the CRA considers an eligible medical expense qualifies — and that list covers over 140 categories, from dental and vision to massage, chiropractic, mental health, and fertility treatments.

Step 3: They Pay Out of Pocket and Keep the Receipt

The employee pays for the expense with their own money, just like they normally would. The only extra step is snapping a photo of the receipt. That's it.

Step 4: They Submit the Receipt

The employee uploads the receipt photo through their provider's app or online portal. No paper forms, no fax machines, no calling in to a claims department.

Step 5: They Get Reimbursed

The reimbursement lands in the employee's bank account by e-transfer — typically within 24-48 hours. The employee receives the money completely tax-free. On the business side, the full reimbursement amount is a 100% tax-deductible business expense.

What Makes It Different from Insurance?

Traditional insurance comes with monthly premiums, exclusions, waiting periods, and claims that get denied for pre-existing conditions. You pay every month whether your team uses it or not.

A Health Spending Account flips that model. There are no premiums, no exclusions, no pre-existing condition rules, and no waiting periods. You only pay when there's an actual expense — and the employee chooses how to spend their benefit on the care they actually need.

It's simpler, more flexible, and usually much cheaper for small businesses.

Get Started with Frontier Health

If you're looking for a fast, affordable way to offer health benefits, Frontier Health makes it easy. No setup fees, no contracts, and claims are reimbursed within 24 hours. Your team gets real health coverage, and your business gets a real tax deduction.

Sign up for Frontier Health and see how simple health benefits can be.

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