As a small business owner, healthcare can feel like one of those nagging “shoulds” that never quite make it to the top of the to-do list. Traditional health insurance plans are expensive. But life doesn’t pause for your budget — your kid needs braces, you’ve got a couple of prescriptions, and maybe you like to travel.
Here’s the good news: you don’t need a big-company budget to offer healthcare benefits. There are options designed for small business owners, and one of the best tools in your toolkit is the Health Spending Account (HSA).
Let’s walk through your main choices and why HSAs might be the easiest win for you and your team.
Option 1: Pay out of pocket with the Medical Expense Tax Credit (METC)
You can always pay your medical bills directly and claim the Medical Expense Tax Credit on your personal tax return. This works okay for lower-income earners with big medical expenses. But for most business owners, it’s not the most efficient route.
Option 2: Traditional health insurance
Remember those robust workplace benefit plans that covered everything from dental to massages? As the business owner, footing that bill is a different story. Premiums are high, and costs can skyrocket with pre-existing conditions or high plan usage. For most small businesses, this option is too pricey.
Option 3: Health Spending Accounts (HSAs)
HSAs let your corporation reimburse you — and your employees — for personal medical expenses. The best part? Reimbursements are 100% tax-free to you and 100% tax-deductible for your company.
We partner with Olympia Benefits, one of Canada’s top HSA providers, because they make it simple and transparent. Here’s why a Health Spending Account make sense:
1. Save on taxes
Say you run a two-person incorporated business that nets $100,000 a year. You have a $3,000 medical bill.
- Without an HSA: You’d need to withdraw over $5,000 from your corporation to cover the cost after tax, losing nearly 43% to income tax.
- With an HSA: Your company pays Olympia’s HSA membership fee of $499, the $3,000 expense is reimbursed tax-free, and you save close to $2,000 in taxes.
👉 Want to see your own numbers? Try Olympia’s HSA Savings Calculator.
2. One simple annual fee
Forget premiums, deductibles, and exclusions. With Olympia, you pay one flat fee per year. You and your dependents can claim up to $15,000 annually. Easy to budget, no surprises.
3. Easy to use
Here’s how it works in practice:
- Pay for your medical expenses with your personal card.
- Upload your receipt online.
- Transfer the money from your business bank account to Olympia.
- Olympia reimburses you personally, tax-free.
What if you have employees?
HSAs scale beautifully for small teams. You set each employee’s annual allowance, and you only pay if they make a claim. The money goes straight to their medical costs — not into an insurance company’s pool.
Employees love the flexibility, and you keep costs predictable.
Who shouldn’t use an HSA?
- Sole proprietors (unfortunately, you need to be incorporated).
- Large corporations (traditional group plans usually make more sense).
For small incorporated businesses with fewer than 50 employees, though, HSAs are tough to beat.
Next steps
Want to learn more? Olympia has a handy list of 53 FAQs on HSAs. You can also call Alden Hui at Olympia (403-668-1845) for details.
And if you’d like to see how an HSA fits into your bigger tax strategy, we’re here to help. We’d love to help you keep more money in your pocket while giving your team a benefit they’ll actually use.
Read more about Small Business Basics that may be helpful to you and your small business.
