A health spending account functions much like a bank account. The Employer (plan sponsor) allocates a pre-determined amount of benefit credits (ie. $500) to each employee (plan member). In turn, the member can then use these credits to pay medical and dental expenses not covered by provincial or employee extended health care plans. The money held in and spent from this account is entirely tax free to the member, with the only exception being in the province of Quebec.

A Health Spending Account can cover the portion of expenses not covered by a health or dental benefits plan. This includes your deductible, coinsurance (portion not covered if your plan covers less than 100%), or amounts that are over your plan maximums. You can also claim expenses not covered under your spouse’s plan.

HSA Benefits

  • Health expenses are paid in pre-tax dollars
  • HSAs are a tax-deductible expense for employers
  • When combined with reduced coverage for other benefits in the extended health care plan, money is saved for the employer and the employee is given more flexibility
  • Helps educate employees about the value of the benefits being provided by the employer
  • Allows employees to have greater flexibility and choice

Health Spending Account list of eligible expenses

Vision care
Medical practitioners
Dental services
Attendant care
Hospitals and other facilities
Devices, supplies and equipment
Items that must be prescribed in writing by a medical practitioner
Diagnostic procedures
Rehabilitative therapy
Transportation and travel expenses


This list is subject to any changes that are made to the list of items qualifying as medical expenses under the Income Tax Act (Canada). For more information on eligible expenses, go to and enter Medical Expense Tax Credits in the search window. Go to the most current version of publication #IT519 (Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction).