Is Frontier Health CRA Compliant? Yes — Here's How We Meet Every Requirement

By Frontier Team•February 11, 2026•5 min read

Yes, Frontier Health is fully CRA compliant. Frontier Health operates as a Private Health Services Plan (PHSP), which is the CRA's recognized structure for tax-advantaged health benefits. Every reimbursement processed through Frontier Health is 100% tax-deductible for your business and 100% tax-free for your employees. Here is exactly how Frontier Health meets each CRA requirement.

What Makes an HSA CRA Compliant?

A Health Spending Account must qualify as a PHSP under the Income Tax Act to receive its tax advantages. The CRA has specific rules about how a PHSP must be structured and administered. If any of these rules are broken, the plan loses its tax-deductible status, and reimbursements become taxable income for your employees. That is a costly mistake.

Frontier Health is built from the ground up to meet every one of these requirements. Let's walk through them.

Requirement 1: Third-Party Administration

The CRA requires that an HSA operate "in the nature of insurance." This means a third party -- not the business owner -- must administer the plan. When a business owner processes their own claims, the CRA sees a conflict of interest and can deny the tax deduction entirely.

How Frontier Health meets this: Frontier Health is the independent third-party administrator. When you sign up with Frontier Health, your corporation enters into a cost-plus agreement with us. We handle claims processing, receipt verification, and reimbursements. Your business never touches the claims process directly, which is exactly what the CRA expects.

Requirement 2: Only Eligible Medical Expenses

The CRA only allows reimbursements for eligible medical expenses as defined under Section 118.2 of the Income Tax Act. This includes dental, vision, prescriptions, physiotherapy, massage therapy, mental health services, chiropractic care, fertility treatments, medical devices, and many more everyday health costs. Anything outside that list does not qualify.

How Frontier Health meets this: Every claim submitted through Frontier Health is reviewed against the CRA's eligible expense list before reimbursement. We verify that each expense qualifies under Section 118.2 so your business never accidentally reimburses something that could trigger a CRA reassessment. If an expense does not qualify, we flag it before any money changes hands.

Requirement 3: Equal Access Within Employee Classes

The CRA requires that a PHSP be available to all employees within the same class. You cannot offer an HSA to one employee and exclude another in the same role or classification. The plan must be fair and non-discriminatory.

How Frontier Health meets this: When you set up your plan with Frontier Health, we help you define employee classes and benefit levels that comply with CRA guidelines. Every employee within a class receives the same coverage. Frontier Health's platform is designed to make this straightforward -- you choose a monthly allowance per person, and everyone in that class gets the same amount.

Requirement 4: Legitimate Employer-Employee Relationship

The CRA requires that participants in a PHSP have a legitimate employer-employee relationship. In practice, this means the employee must be receiving a T4 salary from the corporation. Contractors and sole proprietors without employees generally do not qualify.

How Frontier Health meets this: Frontier Health verifies that your plan structure aligns with CRA eligibility requirements during onboarding. If you are an incorporated business owner paying yourself a T4 salary, you qualify. If you have employees on payroll, they qualify too. Frontier Health helps you set things up correctly from the start so there are no surprises at tax time.

Requirement 5: Actual Expenses with Receipts

The CRA requires that reimbursements be for actual out-of-pocket medical expenses, supported by proper documentation. You cannot reimburse estimates, round numbers, or expenses without receipts.

How Frontier Health meets this: Frontier Health requires a receipt or proof of payment for every claim. Employees simply snap a photo of their receipt, submit it through Frontier Health, and our team verifies the documentation before processing the reimbursement. Every claim is documented and stored, so your business has a complete audit trail if the CRA ever asks questions.

What Would Make an HSA NOT Compliant?

It is worth knowing what the CRA considers a red flag:

  • Self-administration -- If a business owner processes their own claims without a third-party administrator like Frontier Health, the CRA can deny the entire tax deduction. This is the most common compliance failure.
  • Covering non-eligible expenses -- Reimbursing gym memberships, cosmetic procedures, or anything outside Section 118.2 puts your plan at risk.
  • Discriminatory coverage -- Offering different benefit levels to employees in the same class violates CRA rules.
  • No receipts or documentation -- The CRA can reassess your entire plan if you cannot produce receipts for claims.

Frontier Health eliminates all of these risks by handling administration, expense verification, and documentation on your behalf.

Why CRA Compliance Matters

If the CRA determines your HSA is not a valid PHSP, the consequences are serious. Your business loses the tax deduction for all reimbursements, and those reimbursements become taxable income for your employees. You could face reassessments and penalties going back multiple tax years. It is not worth the risk.

With Frontier Health, CRA compliance is built into every step of the process. You do not need to worry about whether your plan meets the rules -- Frontier Health ensures it does.

Get Started with Frontier Health

Frontier Health makes it simple to offer a CRA-compliant health benefit. No setup fees, no long-term contracts, and every reimbursement is fully tax-deductible. Get started with Frontier Health today and give your team a health benefit that is easy, affordable, and fully compliant.

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