A Health Spending Account (HSA) or Health Care Spending Account (HCSA), is an increasingly common component of an employee benefit plan in Canada. It allows an employer to set aside a certain amount of money for their employees to spend on their healthcare needs. Being tax-exempt, the employee isn’t required to pay any tax on it while the employer can write it off as a business expense. However, before you go ahead, you should know the list of HSA-eligible expenses in Canada and which medical and healthcare costs are not eligible.
HSA-eligible expenses in Canada
HSAs in Canada are used to cover a wide range of health-related expenses that are not typically covered by provincial health insurance plans. The eligibility of some expenses may depend on;
- Whether they have been prescribed by a healthcare professional
- Whether they are considered medically necessary
I. Medical Expenses
- Doctor's fees - General practitioners, Specialists (e.g., dermatologists, cardiologists)
- Prescription medications - Drugs prescribed by a licensed physician
- Medical tests and Laboratory fees - Blood tests, X-rays, MRIs
- Hospital services - Private or semi-private room charges
- Surgical procedures - Surgeries not covered by provincial health plans
II. Dental Care
- Routine dental care - Examinations, cleanings, X-rays
- Dental procedures - Fillings, extractions, root canals, crowns
- Orthodontics - Braces, retainers
III. Vision Care
- Eye examinations
- Prescription glasses and contact lenses
- Laser eye surgery
IV. Paramedical Services
- Chiropractors
- Physiotherapists
- Massage therapists
- Psychologists and Psychotherapists
- Acupuncturists
V. Assistive Devices and Equipment
- Hearing aids and batteries
- Wheelchairs and walkers
- Prosthetic limbs and devices
- Orthopedic shoes and inserts
VI. Other Eligible Expenses
- Medical Transportation - Ambulance services, travel expenses for medical treatments
- Home Care and Nursing Services
- Medical Supplies - Bandages, syringes, diabetic supplies
- Rehabilitation Services - Addiction treatment programs, physiotherapy
- Mental Health Services - Counseling, therapy sessions
VII. Health-Related Services and Products
- Fitness Programs - Programs recommended by a physician for a medical condition
- Weight Loss Programs - Prescribed by a physician for a specific health condition
- Smoking Cessation Programs - Including prescription drugs for quitting smoking
HSAs in Canada are regulated by the CRA’s Income Tax Act. This document entails in detail the medical expenses and conditions that can be claimed. Besides the items and services mentioned in the Income Tax Act, a Health Savings Account in Canada can also cover a part of the medical expenses not covered by a pre-existing health or dental benefits plan.
This includes;
- Deductibles
- Coinsurance
- Amounts that are over your maximum
A lot of medical expenses are covered in the HSA, however, there are a few that are not covered. This includes;
- Vitamins
- Life insurance
- Disability benefits
- Gym memberships
- Cosmetic procedures
Remember, these lists are not exhaustive. They are subject to any changes made to the Income Tax Act in Canada. For a complete list of HSA-eligible expenses in Canada, it is recommended to consult the CRA, your benefits broker, or your insurance provider.
Disclaimer: The information provided in this blog or any linked material is not intended and should not be considered a substitute for medical advice, diagnosis, or treatment. For holistic health advice and consultation, visit My Well Self.
