Health Spending Account

What Medical Expenses Are Eligible for a Health Spending Account (HSA) in Canada?

One of the most common questions from new HSA clients is: "What can I actually claim?" The answer is broader than most people expect — and a lot of expenses you've been paying out-of-pocket as an incorporated professional are likely claimable.

A Health Spending Account (HSA/PHSP) allows incorporated business owners and certain sole proprietors in Canada to reimburse medical expenses through their business on a pre-tax basis. The eligible expenses are defined by CRA under Income Tax Act Section 118.2 — the same list used for the Medical Expense Tax Credit. Here's a practical breakdown.

What's Covered: Major Categories of Eligible Expenses

Dental Care

Routine cleanings, x-rays, and exams
Fillings, crowns, bridges, and implants
Orthodontics (braces, aligners)
Dentures and oral surgery

Vision Care

Prescription eyeglasses and contact lenses
Eye exams
Laser eye surgery (LASIK, PRK)

Prescription Medications

All prescription drugs dispensed by a licensed pharmacist
Insulin and related supplies for diabetics
Over-the-counter medications are generally not eligible unless prescribed

Paramedical Services

Physiotherapy and massage therapy (when prescribed by a physician)
Chiropractic care
Naturopathic and osteopathic services
Speech therapy and occupational therapy
Acupuncture (from a licensed practitioner)

Mental Health

Psychologist, social worker, and psychotherapist services
Psychiatric care
Mental health counselling from licensed professionals

Medical Devices and Equipment

Hearing aids and batteries
Wheelchairs, crutches, walkers
CPAP machines and supplies
Blood pressure monitors and glucose monitors

Reproductive Health

In-vitro fertilization (IVF) and assisted reproduction
Birth control prescriptions

Other Eligible Expenses

Hospital services and private room costs
Ambulance services
Medical travel expenses (to receive treatment)
Home modifications for disabilities
Gluten-free food (for diagnosed celiac disease, with documentation)

What Is NOT Eligible Under an HSA

Understanding the exclusions is just as important as knowing what's covered:

Gym memberships and fitness equipment — These are not CRA-eligible medical expenses. They can be covered under a companion PSA (Personal Spending Account) as a taxable benefit instead.
Cosmetic procedures — Procedures performed purely for aesthetic reasons (rhinoplasty, facelifts, cosmetic dentistry for appearance only) are generally not eligible. Medically necessary procedures may qualify.
Vitamins and supplements — Not eligible unless prescribed by a physician for a specific condition. General supplements, protein powders, and over-the-counter vitamins do not qualify.
Health club dues — General wellness programs not directed by a physician are not eligible.
Premiums for private health insurance — Under most PHSP structures, you cannot use HSA funds to pay group insurance premiums. This varies by structure, so check with your administrator.

The PSA as the Complement for Non-Medical Expenses

Many incorporated professionals set up both an HSA/PHSP and a PSA (Personal Spending Account). The PSA covers non-medical lifestyle expenses — gym memberships, fitness classes, sports equipment, personal development courses — as a taxable employer benefit. It doesn't give you the same pre-tax advantage as the PHSP, but it expands the range of expenses you can run through your business. Frank Cover can explain how both work together.

CRA Documentation: What Do You Need to Keep?

CRA may review PHSP claims on audit. To be prepared, keep:

Original receipts for all claimed expenses (not just credit card statements)
Prescription or referral documentation where required (especially for paramedical services)
Documentation confirming the practitioner is licensed in their province
Records of PHSP plan documents and the administrator agreement

Your HSA administrator typically processes reimbursements and maintains records on their end. Keep your own copies as well. Most advisors recommend retaining documentation for at least 6–7 years.

Frank Cover helps incorporated Alberta business owners set up PHSP structures correctly from day one.

Set Up Your Health Spending Account

Frequently Asked Questions

Can I claim massage therapy through my HSA?

Yes, if it's prescribed by a physician. Massage therapy without a prescription is a grey area under CRA rules. To be safe and audit-proof, get a prescription from your doctor. Many people already have one on file from their physiotherapist referral.

Are glasses covered by an HSA?

Yes. Prescription eyeglasses, contact lenses, and eye exams are all eligible CRA medical expenses and can be reimbursed through your HSA.

What about therapy and mental health expenses?

Psychological services from a registered psychologist are eligible. Services from a registered social worker or psychotherapist providing mental health counselling are generally eligible. The practitioner must be licensed by a regulated body in their province.

Can I claim my spouse's and children's medical expenses?

Yes. A PHSP typically covers the employee and their eligible family members — including spouse, common-law partner, and dependent children. This is one of the key advantages for incorporated professionals: you can run all family medical expenses through the business.

What's the deadline to submit HSA claims?

This depends on your plan administrator. Most allow claims for the calendar year to be submitted within 60–90 days after year end. Check with your specific administrator. Frank Cover will connect you with a reputable administrator when setting up your plan.

Also see: HSA vs FSA in Canada — what's the difference?

Published by Frank Cover — Independent insurance advisory. Licensed in Alberta. AIC Member.