Health Spending Account Savings Calculator

Coastal HSA

Canadian Health Spending Account Calculator

Estimate how much you could save using a Canadian Health Spending Account (HSA) compared to paying medical expenses personally and claiming the Medical Expense Tax Credit (METC).

Results are estimates and based on 2025 tax year and results vary based on actual employee spending, income, province, tax rates, and plan setup. This calculator is for illustrative purposes only. Coastal HSA does not guarantee savings, and actual tax and employer/employee benefits may differ. Please consult a qualified tax professional for advice specific to your situation.

Coastal HSA Tax Savings Calculator

Medical Expense Tax Credit (METC) vs Health Spending Account (HSA). Values shown are estimates.

Province / Territory Number of Employees Avg Annual Health Spending per Employee ($) Avg Employee Income ($) Marginal Tax Rate (%)

What Is the Medical Expense Tax Credit (METC)?

The Medical Expense Tax Credit (METC) is a non-refundable tax credit offered by the Canada Revenue Agency (CRA) for eligible medical expenses paid personally.

However, some Canadians are surprised to learn that the METC does not reimburse medical expenses from the first dollar spent. Under CRA rules, you can generally only claim the portion of eligible medical expenses that exceeds:

3% of your net income, or
$2,834 for the 2025 tax year,

whichever is less.

This means many Canadians receive limited or no tax relief on smaller or moderate healthcare expenses. Unlike a Health Spending Account (HSA), the METC only provides partial tax relief rather than direct reimbursement of medical expenses.

The Medical Expense Tax Credit (METC) is a non-refundable tax credit, meaning it reduces income tax owing but does not directly reimburse your medical expenses dollar-for-dollar.

For 2025:

The federal METC credit rate is 14.5% (for 2025) of eligible medical expenses above the threshold amount.
You may also receive an additional provincial tax credit depending on your province.

HSA vs METC

Both Health Spending Accounts (HSAs) and the Medical Expense Tax Credit (METC) generally use the same CRA list of eligible medical expenses, including dental care, prescriptions, vision care, physiotherapy, and many other healthcare services.

With a Health Spending Account, there is no 3% income hurdle or minimum expense threshold. Eligible medical expenses submitted through an HSA are reimbursed starting from the very first dollar.

With the Medical Expense Tax Credit (METC), expenses must first exceed the CRA threshold before any credit applies, and the tax credit is generally around 14.5% federally, plus a provincial credit depending on the province and tax year.

For many incorporated business owners and small businesses, an HSA can provide significantly greater overall tax savings compared to claiming medical expenses personally.

$2000 Health Spending Example

Paying Personally Using the METC
Medical expenses: $2,000
CRA threshold: $2,834
No Medical Expense Tax Credit would generally apply.

Paying Through a Health Spending Account
Medical expenses: $2,000
Admin fee + GST: $147
The employee receives a full $2,000 tax-free reimbursement, and the business deducts the full $2,147 as a business expense.

Who Benefits Most From a Health Spending Account?

Health Spending Accounts are commonly used by all types of businesses and professionals. An HSA can help incorporated professionals pay for healthcare expenses in a more tax-efficient way. While small businesses can choose contribution amounts that fit their budget while still offering valuable healthcare coverage to employees.

View HSA Plans