5 Reasons Why a Health Spending Account (HSA) is Better Than Traditional Health Insurance

For small business owners in Canada, a Health Spending Account (HSA) offers a compelling alternative to traditional health insurance. Unlike the Medical Expense Tax Credit (METC), which offers limited tax relief, HSAs provide 100% tax-free reimbursement for medical expenses. Here are the top six reasons to consider an HSA over traditional health insurance:

Comparison Table

Feature	Health Spending Account (HSA)	Traditional Health Insurance
Premiums	No monthly premiums; clear and transparent fixed rates that include an administrative fee based on the claim and an annual account fee.	Costly monthly premiums which change annually based on risk assessments; making it difficult to predict costs.
Eligible Expenses	Covers a wider range of medical and dental expenses without restrictions, including pre-existing conditions.	Limited coverage with restrictions such as annual or lifetime caps and special authorizations; may exclude pre-existing conditions.
Complexity	Simple structure with 100% coverage up to your contribution limit; expenses are automatically tracked and updated.	Complicated policy guidelines detailing covered items, exclusions, deductibles, co-insurance, and reimbursement rates, leading to confusion over coverage.
Deductibles and Co-insurance	No deductibles or co-insurance requirements; no limits on treatments or visits.	Frequently includes deductibles and co-insurance, typically covering only 50%-80% of expenses, with limits on treatments and visits.
Flexible Coverage	Pay only for the coverage you want and need.	Plans are “one-size-fits-all” meaning you often pay for unused coverage.