As the landscape of family-building continues to evolve, so too has the CRA's guidance on eligible medical expenses reimbursable through a Health Spending Account (HSA). Surrogacy is one area where the rules have been meaningfully updated — but they also come with important limitations that are often misunderstood. Here's what you need to know.
The Legal Foundation
Surrogacy in Canada is governed by the Assisted Human Reproduction Act (AHRA). Under Canadian law, only altruistic surrogacy is permitted — meaning a surrogate cannot be paid a fee for her services. She can only be reimbursed for legitimate, documented out-of-pocket expenses. Any payment beyond that is illegal. This legal framework directly shapes what can and cannot be claimed through an HSA or the federal Medical Expense Tax Credit (METC).
What Is Eligible?
Effective for 2022 and subsequent tax years, the CRA expanded the HSA eligibility to include certain surrogacy-related expenses. Specifically, expenses paid to or on behalf of a surrogate mother are eligible when they:
Are incurred in Canada
Fall within the categories described under the Reimbursement Related to Assisted Human Reproduction Regulations (sections 2–4)
Would otherwise qualify as an eligible medical expense if they had been incurred by the intended parent themselves
Are paid for the purpose of the individual becoming a parent
Have not been reimbursed through insurance, a provincial program, or any other source
Examples of eligible reimbursements include the surrogate's prescription medications, diagnostic testing (such as ultrasounds or lab work), clinic or hospital fees for medical procedures performed in Canada, and eligible travel expenses (when travelling more than 40 km one way for treatment).
Fees paid to a Canadian fertility clinic or donor bank to obtain donor sperm or ova — whether for use by the intended parent or a surrogate on their behalf — are also eligible.
What Is Not Eligible
The following expenses are explicitly excluded:
A fee paid to the surrogate for her services. This is not only ineligible for the METC and HSA — it is prohibited under Canadian law.
Living expenses such as food, vitamins, maternity clothing, or accommodation for the surrogate.
Expenses incurred outside Canada. Unlike some other medical expenses, fertility and surrogacy-related costs must be for services provided within Canada to qualify.
Expenses already reimbursed by a private health plan or provincial program.
Storage of Reproductive Materials
Costs associated with the storage of sperm, ova, or embryos at a Canadian fertility clinic are eligible expenses under an HSA, acknowledging the ongoing nature of fertility preservation.
A Note on Documentation
Given the specificity of these rules, thorough documentation is essential. Keep all receipts, invoices, and records showing the nature of each expense, who it was paid to, and confirmation that it was not reimbursed elsewhere.
For questions about specific surrogacy expenses and your HSA, contact us at support@myhsa.com and we'll connect you with our Adjudication team.