Is this the same as a Flexible Spending Account (FSA)?

No. FSAs are a US product. Canadian PHSPs/HSAs operate under Canadian tax law (IT-339R2). The rules, limits, and eligible expenses are different. Don't assume US HSA rules apply to your Canadian corporation.

What is a Personal Spending Account (PSA) and do I need one?

A Personal Spending Account (PSA) is an optional add-on to your Health Spending Account that covers non-medical lifestyle and wellness expenses — things like gym memberships, fitness equipment, massage therapy, and personal development courses. Unlike the HSA, the PSA is deductible to the corporation but treated as a taxable benefit to the employee. Whether it makes sense depends on your situation — we'll go through it on the call. There's no obligation to add it.

What's the difference between an HSA, FSA, and PHSP in Canada?

These terms are often used interchangeably and it creates a lot of confusion. In Canada: a PHSP (Private Health Services Plan) is the formal CRA-recognized legal structure. An HSA (Health Spending Account) is the common industry name for a cost-plus PHSP — they refer to the same thing. An FSA (Flexible Spending Account) is typically part of a traditional group benefits plan and is structured differently — it's not the same as a standalone PHSP. A PSA (Personal Spending Account) is an optional taxable lifestyle benefit that can be added alongside a PHSP. If your accountant mentioned any of these terms, we can clarify exactly what applies to your corporation on the call.

Do I need an incorporated company to set up an HSA?

Incorporation makes it straightforward. Incorporated professionals (doctors, lawyers, consultants, contractors) are the most common HSA users. Self-employed sole proprietors may qualify but face additional CRA conditions — specifically, they must have at least one arm's-length employee. We'll tell you upfront if you qualify.

How is this different from just paying medical expenses personally?

When you pay personally, you use after-tax dollars. With an HSA, your corporation reimburses you for the same expenses and deducts the full amount as a business expense. Depending on your corporate tax rate, this can save you 30–45% on every eligible dollar spent.

Can I include my spouse and children?

Yes. If your spouse is an employee of the corporation, they can be included. Children under 18 (and some over 18) are covered as dependants. This is one of the most tax-efficient ways for families with incorporated businesses to manage healthcare costs.

What's the annual limit?

There is no CRA-mandated dollar cap on PHSP benefits for incorporated employees (unlike some US HSA plans). The plan must be structured properly and the amounts must be reasonable — but for most business owners, this is not a practical constraint.

Do I need to tell my accountant?

Yes, and they'll likely approve. Your CPA needs to know the plan exists so they can properly deduct the reimbursements on your T2 corporate return. We provide a plan summary document designed specifically for accountants.

Can this replace my existing group plan?

For small businesses (1–10 employees), often yes. Many of our clients cancel expensive group plans and switch to a fully usage-based HSA. It's not right for every situation — if you have employees who want predictable prescription drug coverage, a hybrid approach may be better. We'll walk through your specific setup.

What does Frank charge for this?

Our advisory service is free. If you proceed with an HSA through one of our administration partners, there is typically a small administration fee (usually 10% of claims or a flat monthly fee). You still save significantly compared to traditional premiums. We'll be transparent about all costs upfront.

FrankCoverAIC-Licensed Insurance Broker · Calgary, Alberta

(403) 536-6897

For Self-Employed & Incorporated Business Owners in Alberta — HSA + PSA Available

Your Health Bills Are Costing
More Than They Should.

Name: Frank Cover
Address: Calgary, AB, Calgary, AB, T2P, CA
Telephone: (403) 536-6897
Price range: $$

If you're incorporated and paying medical expenses personally, you may be overpaying in tax.

Structured properly. CRA-compliant. Accountant-friendly.

A Health Spending Account (HSA) lets incorporated business owners convert personal medical expenses into 100% deductible to the corporation as a business expense. CRA-approved. No premiums. No monthly fees.

Tax Deductible

for the business

Tax-Free

for employees

CRA Approved

under PHSP rules

No obligation. No pressure. You'll know quickly if this makes sense.

Example Savings — Incorporated Professional

Annual medical spend$8,400

Without HSA (personal)0% deductible

With HSA (business)100% deductible

Est. tax savings (40% bracket)~$3,360/yr

Sole proprietor · family of 3 · $3,000/yr~$1,050/yr savings

35% bracket

Incorporated · single · $1,800/yr~$774/yr savings

43% bracket

Illustrative only. Speak with your accountant. CRA rules apply.

CRA-Compliant

PHSP / Cost-Plus

A note on terminology: In Canada, the formal CRA-recognized structure is a Private Health Services Plan (PHSP). What most advisors refer to as a Health Spending Account (HSA) is typically a cost-plus PHSP — structured to reimburse medical expenses on a tax-efficient basis. A Flexible Spending Account (FSA) is usually part of a traditional group benefits plan and is structured differently. A Personal Spending Account (PSA) is an optional taxable benefit that can be added alongside a PHSP to cover non-medical lifestyle expenses. If you've heard any of these terms from your accountant or online, you're in the right place. We'll confirm the correct structure for your corporation during your review.

CRA-Compliant PHSP

IT-339 Compliant

Accountant-Approved

Owner + Employee Eligible

No Premiums Required

Audit-Safe Documentation

Why Frank

Why business owners work with Frank.

Advisory, not sales. Structure, not shortcuts.

Licensed Alberta Advisor

Not a call centre. Not an app. A licensed advisor who understands Alberta business structures.

Structured to Withstand CRA Review

Plan documentation is set up correctly from day one — so your accountant isn't cleaning up a mess later.

Works Alongside Your Accountant

We handle the plan structure. Your CPA handles the tax return. We make their job easier, not harder.

No Generic Templated Documents

Your plan reflects your corporation's structure. Not a copy-paste from a website.

Ongoing Support If Needed

Questions come up. CRA rules evolve. You'll have a real person to contact — not a ticketing system.

Transparent About What You Need

If an HSA isn't the right fit for your situation, we'll tell you that upfront. No upselling.

Quick Reference — Canadian Terminology

PHSPCRA-recognized legal structure

HSACommon name for a cost-plus PHSP

FSAUsually part of a traditional group benefits plan — structured differently

PSAOptional taxable lifestyle benefit add-on

The Full Picture

Everything your accountant wants you to know.

Written for business owners, professionals, and their advisors. No fluff.

What is a Health Spending Account (HSA)?

A Health Spending Account — also called a Private Health Services Plan (PHSP) or Cost-Plus plan — is a CRA-recognized mechanism that allows Canadian businesses to reimburse employees (including owner-employees) for eligible medical expenses — 100% deductible to the corporation as a business expense. Unlike group insurance, there are no monthly premiums, no underwriting, and no coverage limits based on plan design. You simply spend on health, submit receipts, and the business deducts the reimbursement as a business expense. The employee receives the benefit tax-free. This structure is supported under the Income Tax Act (paragraph 20(1)(e.1)) and longstanding CRA administrative guidance, including former Interpretation Bulletin IT-339R2 (archived).

How It Works

Three steps. No ongoing premiums.

We Set Up the Plan

We establish your PHSP plan document — the formal legal structure CRA requires. Takes about 15 minutes. Your CPA gets a copy.

You Incur Eligible Expenses

Pay for dental, vision, prescriptions, or any CRA-eligible medical expense. Keep your receipts.

Submit & Deduct

Submit receipts through the plan. The business reimburses you. The reimbursement is a 100% deductible business expense. You receive it tax-free.

Not Sure Yet?

Not sure if this is right for you?

If an HSA — or the full HSA + PSA combo — doesn't make financial sense for your corporation, I'll tell you. The goal is proper structure, not forcing a product that doesn't fit.

HSA vs Group Benefits

Why small businesses are switching.

Feature	Group BenefitsTraditional plan	HSA / Cost-PlusFrank Cover
Monthly premiums(HSA: pay only what you use)
Tax deductible for business
Tax-free for employee
No underwriting required
Covers pre-existing conditions
Usage-based (no waste)
CRA-approved structure
Works with 1-person corps
Wellness & lifestyle expenses (gym, fitness, personal development)(HSA: via optional PSA add-on)
100+ eligible expense categories
Premium increases on renewal(HSA: cost is what you spend)

Add-On Benefit

Add a Personal Spending Account (PSA)

Cover what the HSA can't.

A Personal Spending Account works alongside your HSA to cover non-medical lifestyle and wellness expenses. Deductible to the corporation, but treated as a taxable benefit to the employee. Same plan. No additional premiums. We set it up at the same time.

HSA Covers — Tax-Deductible to Corporation

Dental & vision
Prescriptions
Medical devices
Paramedical services (chiro, physio, massage for medical purposes)
Hearing & eye care

PSA Covers — Flexible Corporate Benefit

Gym memberships & fitness equipment
Massage therapy (wellness)
Personal development courses
Wellness apps & programs
Other lifestyle benefits defined in your plan

Not sure which expenses fall under which account? We explain it all on the call.

Built to align with CRA guidelines and professional accounting advice.

Documentation references CRA Interpretation Bulletin IT-339R2 and Income Tax Act provisions.

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Answer a few quick questions. We'll match you with the right plan and real pricing — no pressure.

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FAQ

The questions your accountant is already asking.

Related Guides

Health Spending Account

HSA vs FSA in Canada — What's the Difference and Which One Do You Need?