Comparing HSA Providers in Canada -
There are alternatives to Olympia Benefits

Calgary-based Olympia Benefits is the largest HSA provider in Canada, having been in business for over 20 years. Customer reviews of Olympia Benefits also appear favorable. But Olympia isn’t the only game in town, and it certainly isn’t the only company worth considering.

The best HSA provider for your business depends on your business’s needs.

How to Compare HSA Providers in Canada.

Health Spending Accounts in Canada are fundamentally different from those in the United States where they act as employee-owned savings and investment vehicles. In Canada HSAs are simpler in both design and function. Here, they are strictly a means of converting employee health expenses into a tax-deductible business expense. This tax break is designed to encourage and enable employers of all size to offer affordable employee health benefit plans.

As a result of their simplicity, HSA providers in Canada can be compared using a few basic criteria:

1. What is their pricing structure?

Factors to consider when comparing pricing across HSA providers:

  1. Pay-per-use (‘cost-plus’) or subscription? All HSA providers charge either an administration fee per claim (for example we charge 5% of approved claims), an annual subscription fee, or both. Pay-per-use (otherwise known as ‘cost-plus’) plans typically charge in the range of 5%-10%. If you plan on submitting a lot of claims each year, an annual subscription fee might make the most sense. But keep in mind that even a $100 subscription fee would be equivalent to $2000 worth of submitted claims using a cost-plus plan (at only a 5% admin fee). Some HSA providers charge both pay-per-use and annual subscription fees, which allows them to artificially reduce their pay-per-use fee. Another downside of a subscription fee is that it will necessarily lock you into a yearly contract. 
  2. Is the full pricing structure clearly indicated? There are a variety of ways that HSA providers generate revenue, and this information is not always clearly displayed. In addition to pay-per-use and/or annual subscription fees, additional charges can include set-up fees, fees to add or remove employees from the plan, transaction fees for each employee reimbursement, add-on insurance fees, and contract termination penalties. At EasyHSA we have only one fee: our 5% administration fee.  
  3. Is there a minimum benefit size required per employee? Requiring employers to offer higher employee benefit levels is an indirect way for HSA providers to increase their fees.

2. Pay-as-you-go or up-front deposit?

Are employers required to pre-fund their HSA plan, or pay only when the plan is used? This distinction acts as a double-edged sword (albeit a sword with one very sharp side and one very dull one). With pay-as-you-go services you only pay when you are invoiced for approved claims, and only for the amount that is actually claimed (plus fees and taxes). This is what we do at EasyHSA. Once per month we invoice each employer for all the claims submitted in the previous month. This keeps your money in your bank account (or better yet, invested) and ensures that you remain fully aware and in control of your company’s health care spending. However, pay-as-you-go does result in a longer turn-around time for employee claims. With up-front deposits employers are required to fund their HSA plans in advance of using them (usually with some percentage up front and the rest deposited on a monthly schedule over the first year). This results in thousands of dollars of your money sitting year after year in your HSA provider’s bank account rather than your own, and necessitates periodic reconciliation to replenish/reclaim amounts (and in some cases redistribution to prevent fund forfeiture). The opportunity cost created by having your HSA provider hold your money in their bank account year after year can be staggering. Up-front deposits are one of the most significant hidden fees of HSAs in Canada, and could cost employers more in lost investment return than all other costs of operating an HSA combined. Assuming a conservative 7% return on investment in a balanced investment portfolio (or possibly a much greater return if reinvested in your business), holding your money in their account would alone cost your business considerably more than our 5% administration fee. This is even before considering that these companies also charge administration and other fees, and before considering the magic of compound growth! For an example of this comparison, please see here. Do you want to prioritize employee reimbursement speed, or maximize your return, cash-flow and fiscal control? With EasyHSA, we prioritize the latter.

3. What level of commitment is required?

Does the HSA provider lock you into an annual plan? What happens if you decide to terminate the plan early? At EasyHSA our contract enables you to meet CRA eligibility requirements without locking you in. You are always free to cancel your plan with us for whatever reason and without penalty.

4. What product(s) do they sell?

There is only one definition of a health spending account recognized by the Canada Revenue Agency.

This means that all Health Spending Accounts in Canada provide 100% coverage of CRA-approved medical expenses for covered employees and their eligible dependents (up to an employer-determined maximum benefit). Regardless of the particular HSA provider you choose to work with, employees have the flexibility to use their HSA to cover the full cost of a wide range of health services and supplies.

Some HSA providers offer different HSA product categories. These differences only reflect tiered pricing schemes, minimum benefit size requirements, or the bundling of HSAs with unrelated add-on products – the underlying HSA remains the same.

What about these ‘add-on’ products?

Some providers will offer third-party insurance products for an additional fee. Adding non-health related insurance products, such as non-medical components of travel insurance, could invalidate the HSA in the eyes of the CRA if that component of the total cost surpassed 10%. Since additional travel and health insurance is widely available elsewhere, the added cost of including this with your HSA plan should be considered separately.

‘Wellness Spending Accounts’ (WSA) or ‘Personal Spending Accounts’ may also be available depending on the HSA provider. These are add-on spending accounts that can be used for other types of services such as gym memberships. WSA amounts are a taxable benefit in the hands of the employee, meaning that they are treated the same as regular employee income. It is up to each employer to weigh the value of offering this benefit to their employees. Would your employees value having a WSA more than an equivalent salary increase or cash bonus? Keep in mind that the cost of offering an employee an equivalent salary increase or bonus is easier from a payroll administration perspective, and is less expensive.

5. Which types of employers are eligible to participate?

All providers offer HSAs to incorporated businesses, which includes single owner-operator corporations such as professional corporations. Many also offer HSAs to sole-proprietorships – but not every provider. This is because HSAs for sole proprietorships have more rigid and complex rules with respect to business owner eligibility and benefit structure. This makes them less profitable for HSA providers. Learn more about our HSA eligibility criteria.

6. Do they help you satisfy CRA rules and regulations?

HSA providers in Canada are not liable if your company’s HSA benefit plan is deemed ineligible by the CRA. However, HSA providers can help you maintain your eligibility by:
  1. Having you sign a CRA-friendly HSA provider contract.
  2. Informing and encouraging you to follow the strict rules regarding employee and owner eligibility.
  3. Informing and encouraging you to set up appropriate employee classes and benefit maximums.
  4. Informing and encouraging appropriate HSA usage by both employer and employee.
  5. Collecting and remitting applicable taxes. Each province has their own GST/HST rate, and RST and Premium tax must also be charged on health spending accounts in Ontario. If your HSA provider is not collecting and remitting these taxes, then you are required to do so.

How can EasyHSA afford to be so competitive?

That’s easy, we keep it simple. As long-time owners of small businesses, we designed EasyHSA from the ground up to be cost-effective, straight-forward, and trustworthy. Learn more

Thoughtful design and prudent management. Exactly what we ourselves would expect in an HSA benefits provider.