Paying for Prescriptions Through Your Corporation in Canada: A Better Way
Yes, there is a much better way. If you're incorporated in Canada and paying for prescriptions out of pocket, you're spending after-tax personal dollars on something your corporation could cover as a tax-deductible business expense. The solution is a Health Spending Account. Your corporation sets one up, you submit your pharmacy receipts, your corporation reimburses you tax-free, and it deducts the full amount. You save 30-50% on every prescription you fill.
How It Works
The mechanism is simple:
- Your corporation sets up an HSA through a third-party administrator (required by the CRA)
- You fill your prescription at any pharmacy and keep the receipt
- You submit a photo of the receipt through the administrator's app
- Your corporation reimburses you by e-transfer, typically within 24-48 hours
- Your corporation deducts the reimbursement as a business expense
The reimbursement does not appear on your T4 and is completely tax-free to you. Your corporation writes it off. Both sides win.
The Tax Savings Are Real
Say you spend $300 per month on prescriptions -- $3,600 per year. Without an HSA, you need to earn roughly $5,000 to $5,400 in pre-tax personal income to cover that cost after federal and provincial taxes. With an HSA, your corporation deducts the full $3,600 as a business expense and you receive every dollar tax-free. That puts $1,400 to $1,800 back in your pocket every single year -- just on prescriptions.
It Covers All Prescriptions
This is not a drug formulary with a list of approved medications. An HSA covers any eligible medical expense that the CRA allows, which includes every prescription drug dispensed by a licensed pharmacist. Antibiotics, blood pressure medications, antidepressants, insulin, specialty drugs, medical cannabis with proper documentation -- if a practitioner prescribed it, your HSA covers it. No pre-approvals, no claims denied because a medication is "not on the list."
And it is not limited to prescriptions. The same HSA covers dental, vision, physiotherapy, massage therapy, mental health counselling, fertility treatments, and much more.
One Important Requirement
You need to draw a T4 salary from your corporation. An HSA is structured as an employee benefit, so you must be a legitimate employee of your own corp. If you pay yourself any salary at all -- even a modest one alongside dividends -- you qualify. Dividends alone will not work.
How Frontier Health Compares
Several providers offer HSAs in Canada, including Olympia Benefits, Wellbytes, and EasyHSA. What makes Frontier Health different is that there are no monthly premiums and no setup fees. You only pay when you actually submit a claim. Sign up in minutes, submit a receipt photo through the app, and get reimbursed by e-transfer within 48 hours. No paperwork, no waiting, no wasted money on months you do not have expenses.
Stop Overpaying for Prescriptions
If you are incorporated and paying for prescriptions with after-tax dollars, you are leaving thousands on the table every year. Setting up an HSA through Frontier Health takes minutes, costs nothing upfront, and starts saving you money on your very first prescription.
For more details on what prescriptions are covered, see our guide to HSA-eligible prescription drugs. To learn how HSAs work for incorporated professionals, read our HSA guide for incorporated professionals in Canada.