A Health Spending Account is a type of private health services plan (PHSP) that an employer, including an incorporated business, can set up to pay eligible medical expenses for employees, including an owner who works in the business, as a business expense. The employer allocates a set dollar amount per year for each eligible employee (including the business owner), and that amount can be used to reimburse any medical expense eligible under the Income Tax Act — including expenses not covered by a traditional health plan. HSAs offer complete flexibility: they can cover dental, vision, prescriptions, paramedical services, orthodontics, laser eye surgery, and hundreds of other eligible expenses. For self-employed individuals with a corporation, an HSA can be used alone or alongside a traditional health insurance plan to cover co-insurance, deductibles, and expenses exceeding plan maximums. A benefit given to an owner as a shareholder rather than as an employee is taxable, and the CRA warns that a sole proprietor with no arm’s-length employees cannot deduct amounts paid to an HSA.