HSA for Small Business Owners: How to Save on Employee Health Benefits in Canada

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

If you run a small business in Canada with 1-5 employees, a Health Spending Account lets you offer real health benefits without paying $150-$300 per person per month in insurance premiums. You only pay when someone actually has a medical expense, and every dollar is 100% tax-deductible for your business. For most small teams, that means saving thousands of dollars a year while giving your people coverage that actually works.

The Problem: Traditional Insurance Is Too Expensive for Small Teams

Traditional group insurance plans are built for large companies. When you try to buy one for a team of 3, the math doesn't work. You're looking at $150-$300 per person per month in premiums — that's $5,400 to $10,800 per year for a 3-person team. And you pay that whether anyone uses it or not.

Most small teams don't use anywhere near that amount. So you end up paying for bundled coverage nobody asked for, watching premiums climb 8-15% every renewal, and getting locked into plans that don't flex with how your team actually works.

How an HSA Solves It

With an HSA, you set a monthly budget per person — typically $50-$150 per month. That money only leaves your account when someone submits a real medical expense. No premiums, no waste.

Every dollar you reimburse through the HSA is 100% tax-deductible for your business, and 100% tax-free for your employees. Compare that to paying someone extra salary to cover their own health costs — where you'd need to pay roughly $3,200-$3,400 in gross salary to give them the same $2,400 in after-tax value.

Real Cost Comparison: 3-Person Team

Here's what a year actually looks like:

  • Traditional insurance: $200/person/month in premiums = $7,200/year. Paid whether anyone claims or not.
  • HSA at $100/person/month: $3,600/year — only if every dollar of the budget is used. With Frontier Health, the admin cost is $450/year plus 5% per claim.

That's up to $3,600 saved per year — and in practice, most teams save even more because not every month has claims.

What Your Team Can Actually Use It For

An HSA covers any eligible medical expense recognized by the CRA. That includes dental, vision and glasses, prescriptions, physiotherapy, massage therapy, chiropractic care, mental health counselling, fertility treatments, and much more. No exclusions, no pre-approvals, no claim denials.

A Real Benefit That Helps You Hire and Retain

Offering health benefits sets your business apart. A clean, modern health benefit makes your business look professional and competitive — even against larger companies with bigger budgets. When a candidate is choosing between two offers, the one with health coverage wins.

Get Started with Frontier Health

You can use our savings calculator to see exactly how much your business could save. Frontier Health handles the full setup, CRA-compliant reporting, and reimburses your team by e-transfer within 48 hours. No setup fee, no minimums, cancel anytime.

Simplify Your Business Health Benefits

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