Cost of a Health Spending Account

Monthly Cost

Employer costs are limited to monthly contributions, an administration fee (typically 10%), plus provincial and federal taxes (typically 10.5%).

Rewards Based Compensation

You can design your contribution schedule to match your approach to total compensation. Some organizations provide the same contribution for all employees, other differentiate based on job classification while others use seniority and earnings to allocate the benefits budget. Unlike health insurance, where 20% of employees use 70-80% of the budget, all employees have equal access to benefits regardless of health or number of dependants.

Annual Refunds

Unusable contributions (along with provincial taxed paid) are refunded to the employer at the end of each calendar year. Amounts that were contributed for terminated employees during the current and prior calendar years are refunded. Amounts that were contributed for active employees during the prior calendar year (not the current year) are refunded. The refunds are the provided to the employer in the form of a cheque or remittance credit to cover the benefits cost during the first few months of the year. While the employer may provide or share refunds with staff, tax regulations prohibit employees benefiting on the basis of the refund they generated. When refunds are distributed to staff it is typically in the form of a special contribution to the health spending account or retirement savings plan based on an equal share by the number of employees participating on the refund date.


You control your benefit cost with the contribution formula that can be adjusted at the beginning of each calendar year. Unlike with health insurance, your costs do not automatically increase annually based on claims and health inflation.

Limited Liability

The contribution formula sets an overall spending limit for each employee thereby limiting your liability for large claims. Unlike with health insurance, your costs do not automatically increase based on the amount of your employees’ claims.

Cost Estimate

This budget worksheet helps you allocate the benefit budget amongst staff.