How to Set Up a Health Spending Account for Your Business in Canada

By Frontier Team•February 10, 2026•7 min read

Setting up a Health Spending Account (HSA) for your business is one of the easiest ways to save money on healthcare in Canada. Instead of paying for medical expenses with after-tax personal dollars, your corporation pays with pre-tax business dollars — and the employee receives the benefit tax-free.

The whole process takes about 10 minutes. Here's exactly how to do it.

Step 1: Check if Your Business Qualifies

Most incorporated businesses in Canada qualify for an HSA. You need to meet two requirements:

Your business is incorporated — either a corporation with no arm's length employees (just you, or you and your spouse) or a corporation with arm's length employees on payroll.
You pay yourself T4 employment income — you need to be on payroll with your own corporation, not just taking dividends.

That's it. There's no minimum revenue, no minimum number of employees, and no industry restrictions.

What about sole proprietors? Sole proprietorships and partnerships can technically set up an HSA, but the tax rules are restrictive — the owner can't benefit directly from the plan. If you're a sole proprietor, incorporating first is usually the better path.

Step 2: Choose Your HSA Provider

Your HSA needs to be administered by a third-party provider to qualify as a Private Health Services Plan (PHSP) under CRA rules. Self-administering your own HSA is not recommended — it creates audit risk, and the CRA can deny your deductions if the plan isn't properly structured.

When comparing providers, pay attention to:

Pricing structure — setup fees, annual fees, per-claim fees, and any hidden charges
Claims speed — how quickly employees get reimbursed
Technology — mobile app, digital claim submission, or still paper-based
CRA compliance — proper plan documentation, tax remittance, and annual reporting

Provider Pricing Comparison

Provider	Setup Fee	Annual Fee	Per-Claim Fee	Claims Speed
Frontier Health	$0	$120 (solo) / $450 (staff)	8% (solo) / 5% (staff)	24 hours
Kibono	$0	$0	$2.25 + 5.25%	Same-day available
EasyHSA	$0	$0	10%	Standard
myHSA	Varies	Varies	Varies	3 days
Quikcard	Varies	Varies	Varies	Standard

For a detailed breakdown of each provider, see our full comparison guide.

Our recommendation: Frontier Health offers transparent pricing with no surprises, 24-hour claim processing, and a simple mobile app. No setup fees, no contracts, cancel anytime.

Step 3: Set Your Annual Benefit Limits

When you sign up, you'll choose how much each person can claim per benefit year. This is your annual contribution limit — the maximum amount the business will reimburse for medical expenses.

For incorporated individuals (just you, or you + spouse):

The CRA considers up to $15,000 per person per year as a reasonable benefit limit. You can set it lower — many solo business owners start with $3,000 to $5,000 and increase as needed. There's no penalty for setting a limit you don't fully use, because with a pay-as-you-go HSA, you only pay when claims are submitted.

For businesses with employees:

You can set different limits for different classes of employees (e.g., executives, full-time, part-time). The limits need to be "reasonable" in the eyes of the CRA. For more detail on what counts as reasonable, see our contribution limits guide.

A common starting point for small businesses:

$1,500–$3,000/year per employee for basic coverage
$5,000–$10,000/year for more comprehensive coverage
Up to $15,000/year for executives or key employees

Step 4: Register and Onboard

With Frontier Health, signing up takes about 10 minutes:

Create your business account at app.frontierhsa.ca — enter your business name, incorporation details, and contact information.
Set your benefit limits — choose how much each person can claim per year.
Add employees (if applicable) — enter their names and email addresses. They'll receive an invite to create their own account.
Done — your HSA is active and ready for claims.

There's no setup fee, no paperwork to mail in, and no waiting period. Your plan is CRA-compliant from day one, because Frontier Health handles the plan documentation, tax remittance, and annual reporting on your behalf.

Step 5: Submit Your First Claim

Once your account is set up, here's how a claim works:

Pay for an eligible medical expense — a dental cleaning, prescription, physio appointment, eyeglasses, or any of the 140+ CRA-eligible expenses.
Take a photo of the receipt and submit it through the Frontier Health app.
Get reimbursed by e-transfer within 24-48 hours — directly to your personal bank account.

The reimbursement is completely tax-free for the employee. The business deducts the full amount as a business expense on its corporate tax return.

How Much Will You Actually Save?

Here's a real example. Say you're an incorporated consultant in Ontario earning $100,000 and you spend $5,000 on medical expenses this year (dental, eyeglasses, prescriptions, a few physio sessions).

Without an HSA:

You pay $5,000 from your personal bank account, using after-tax dollars
At a ~43% marginal tax rate, you needed to earn about $8,770 in pre-tax income to have that $5,000

With Frontier Health HSA:

Your corporation pays $5,000 + $400 in admin fees (8%) = $5,400 total
The full $5,400 is a tax-deductible business expense
You save approximately $3,370 in taxes

That's real money back in your pocket every year. And it gets better the more you spend on healthcare — families with kids, dental work, or ongoing therapy save even more.

For an interactive calculation based on your province and income, try our tax savings calculator.

Common Questions

How long does setup take?

About 10 minutes online. No paper forms or waiting periods.

Do I need to pre-fund the account?

No. With Frontier Health, you only pay when claims are submitted. There are no deposits, no prepaid balances, and no wasted premiums.

Can my spouse and kids use it?

Yes. Dependents are covered under your plan at no extra cost. Your spouse's and children's eligible medical expenses can be claimed through your HSA.

What if I already have group insurance?

An HSA works alongside traditional insurance. Employees can use their HSA to cover deductibles, co-pays, and expenses that insurance doesn't cover (like dental implants, laser eye surgery, or fertility treatments).

What if nobody submits claims?

You pay nothing. There are no monthly premiums or minimum spending requirements. If your team has a healthy year with few expenses, your costs are near zero.

Is there a contract or cancellation fee?

No. Frontier Health is month-to-month. Cancel anytime with no penalties.

Will my HSA hold up in a CRA audit?

Yes, as long as it's properly administered by a third-party provider. Frontier Health handles all CRA compliance requirements including plan documentation, annual reporting, and tax remittance. That's the whole point of using a provider instead of trying to do it yourself.

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Setting up an HSA is one of the highest-impact, lowest-effort financial moves a Canadian business owner can make. It takes 10 minutes, costs nothing to set up, and starts saving you money on the very first claim.

CRA rules for HSAs -- What the CRA requires

Simplify Your Business Health Benefits

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