Buyer's guide
How to choose a Health Spending Account provider in Canada
A Private Health Services Plan (PHSP), often called a Health Spending Account (HSA), lets an incorporated business pay for health and dental expenses directly: deductible to the corporation and tax-free to the employee when the plan meets CRA's conditions.
Many providers offer the same basic arrangement, so the differences are in the fees, the rules and the service. These are the things worth comparing, followed by our own figures so you can hold us to the same test.
One thing is the same everywhere: a cost-plus plan is for incorporated businesses. CRA's position is that it is not deductible for a sole proprietor.
What to compare
Total cost on your own claims
Providers price in different ways: a percentage of each claim, a flat fee per claim, a monthly or annual fee per employee, or a mix. Take what your family actually spends in a year and work out the full cost under each model, including GST/HST on the fees. A low percentage with an annual fee can cost more than a higher percentage with none.
Set-up, renewal and closing fees
Ask what you pay to open the plan, to renew it each year, and to close it. Ask whether a referral from your accountant or advisor changes any of them.
Minimum claims and per-employee charges
Some plans set a minimum claim amount or charge per person covered. If you claim small amounts often, or cover several employees, these add up.
Limits and unused room
Check who sets each employee's annual limit, whether unused room carries forward, and what it costs to go above the standard limit.
Who reviews your claims
A plan is only deductible if it is run properly. Ask whether a person reviews claims and keeps the records CRA expects, or whether claims are paid automatically.
Owner-only corporations
If you are the only employee, ask how the provider handles CRA's published concerns about shareholder-only plans. A provider who says there is nothing to think about is not giving you the full picture.
Where the money goes
Ask how reimbursements flow. Funds that pass through a trust account are kept apart from the administrator's own money.
How you submit and get paid
Online claims with receipt uploads, direct deposit, and a real person to email when a claim is unusual are the practical things you will notice every time you use the plan.
Medallion Health at a glance
Administering Private Health Services Plans since 2016, from Calgary, for incorporated businesses across Canada.
| Set-up fee | $375 per plan, plus GST/HST, flat regardless of how many employees. Waived with a referral code. |
|---|---|
| Annual or monthly fee | None on the standard plan. Plans renew at no charge. |
| Administration fee | 10% of each claim, plus GST/HST on the fee, charged only when a claim is paid. |
| Minimum claim | None. Any amount can be claimed. |
| Premiums | None. A PHSP is not insurance. |
| Medical tests or questionnaires | None. |
| Annual limit | Up to $15,000 per employee per plan year, set by the employer. Unused room carries forward 12 months. |
| Higher limits | Optional, in $5,000 blocks at $100 per block per year plus GST/HST, chosen in the first 30 days of a plan year. |
| Who can join | Incorporated Canadian businesses and professional corporations. Not sole proprietors. |
| Who is covered | Employees (including an owner who works in the business), their spouse or partner, and eligible children. |
| Eligible expenses | The expenses CRA accepts for the medical expense tax credit, including dental, vision, prescriptions, paramedical services and care received outside Canada. |
| Sign-up and claims | Online. Claims and receipts are submitted through a secure portal. |
| Claim review | Every claim is reviewed by a person at Medallion before it is paid. |
| Payment | Reimbursements are paid by direct deposit in one of two payment runs each month, through a trust account. |
General information, not tax advice. Eligible expenses are determined by the Canada Revenue Agency; Medallion Health is not responsible for CRA's determinations.