There’s a persistent belief among some business owners and HR leads that if you can do something yourself, you probably should. Especially if it might save money. Especially if it looks simple enough.
On paper, self-administering a Healthcare Spending Account seems like one of those things. It appears straightforward. You reimburse employees for health-related expenses. You skip the fees charged by third-party administrators. You keep it lean and in-house.
But like many seemingly simple ideas, the closer you look, the more complex it becomes. What begins as a cost-cutting measure quickly drifts into murky territory. And it’s not just about paperwork or tax codes. It’s about trust, privacy, liability and time. Especially time.
Let’s start there.
We often underestimate the weight of administrative work. Verifying receipts. Checking plan maximums. Making sure a claim is eligible under CRA rules. Calculating and applying the right tax. Reimbursing the employee. Logging the reimbursement properly. Doing it all again next week. Maybe tomorrow.
If you’re running a business, every hour spent here is an hour not spent on strategy or growth or building culture. That’s the real cost—one that doesn’t show up on a balance sheet but accumulates over time. And it’s not just the owner’s time. Whoever is assigned this task becomes a health benefits expert by default. Except they’re not.
In Canada, employee health information is protected by law. If your employees are handing over medical receipts to you or another staff member, you’re not just handling paperwork. You’re holding sensitive personal information you were never meant to see.
And it’s not just a matter of legal compliance. The relationship between employer and employee can be negatively impacted if it’s known that sensitive data is being handled in-house. How comfortable are your people going to feel submitting claims if they know their manager, or their manager’s assistant, is reading through the details?
You don’t want to become the person who knows that an employee’s child is in therapy or that another is taking medication for a chronic condition. Not because you’re indifferent. But because that knowledge isn’t yours to hold.
There’s a reason benefits administration is its own profession. Health Spending Accounts are governed by a web of tax rules, federal and provincial. In Ontario, for example, Retail Sales Tax often applies to group benefits and must be remitted quarterly. Miscalculating it, or failing to remit it at all, puts you at risk of non-compliance.
And then there’s the question of eligible expenses. CRA rules are very specific. Cosmetic procedures? No. Prescribed medications? Yes, mostly. What about orthotics? Only if certain criteria are met. Most business owners aren’t equipped to make these distinctions. And if an audit comes, “I didn’t know” isn’t a strong defence.
You apply the wrong tax. You reject an eligible claim. You accept one that isn’t. You miss a deadline. You store records improperly. You delay reimbursement. You lose employee trust. The cascade starts quickly, and it rarely moves in isolation. One mistake begets another.
And if something goes truly wrong; if a complaint is filed or if sensitive information is mishandled, the savings you hoped for are long gone.
Outsourcing your HSA to a third-party administrator removes much of the risk mentioned above. It ensures your plan is handled by people who understand the legislation, who know what qualifies and what doesn’t, who have systems in place to protect privacy, and who can offer employees a neutral and professional experience.
It’s a layer of protection around your team and your business. For a modest fee, you get peace of mind and time back. You preserve the integrity of your benefits program. And you avoid becoming an accidental expert in health benefits administration.
The instinct to take things in-house is understandable. But some responsibilities come with strings attached. Administering your HSA is one of them. Most companies aren’t built to carry that weight. The good news is, they don’t have to! If you want to know which options suit your business, please don't hesitate to reach out. Our team of experts will take the time to analyze your business and workforce to come up with a plan that suits your needs and goals.
