For the following example, we are using the below metrics for a business owner:

Personal Income: $250,000 Marginal Tax Rate ON: 53.53%

Medical Expenses: $5,000 HSA Admin Fee: 7.5%
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Savings Comparison

In the example, on the right you will see the true cost to your company when you pay for a $5,000 medical expense personally with after-tax dollars. To get $5,000 you must withdraw $10,759.63 from the company. $5,759.63 or approximately 53% is lost to income tax. Plus, given the minimum threshold of $2,352 set out by the CRA, you would only be eligible for a $530.92 personal tax credit.

The corporation is able to write off 100% of the costs associated with the HSA.

Instead of paying the government 53% tax, you pay admin fees and taxes of roughly $900. Your company saves almost $5,000 in (marginal income) taxes with an HSA!

In conclusion...

This business owner can either spend an extra $5,759.63 in income tax to claim the full $5,000 in medical expenses using the METC and only be eligible for $530.92 reimbursement OR they can write off 100% of the $5,000 expense using their tax free health spending account and only spend $931.25 in admin fees and taxes to receive the full $5,000 reimbursement.

To make it simple...

This business owner can either SPEND an extra $5,759.63 using the METC OR they can SAVE $4,828.38 using their HSA.

Questions? Reach out to support@getmyhsa.com