A  Health Spending Account (HSA) is a non-taxable, CRA-compliant benefit that reimburses employees for medical and dental costs. 

A Wellness Spending Account (WSA) is a taxable benefit that covers wellness-related expenses like gym memberships, smoking cessation, ergonomic equipment, or personal development. 

We’re making it easy to understand what each account covers, how they differ, and how to choose the right one for your workplace.

HSA vs WSA at a Glance

Health Spending Account (HSA)

• Covers eligible medical, dental, and vision expenses
• CRA-approved expenses only
• Not taxable to the employee
• Fully tax-deductible for the employer
• Common expenses include:
• Dental exams and cleanings
• Prescription medications
• Eyeglasses and vision care
• Licensed mental health therapy
• Governed by the CRA Medical Expense Tax Credit list
• Ideal for managing health costs in a tax-efficient way
• Can be offered alongside a WSA

Wellness Spending Account (WSA)

• Supports wellness, fitness, and personal development
• Expenses are defined by the employer (not CRA-governed)
• Considered a taxable benefit to the employee
• Fully tax-deductible for the employer
• Common expenses include:
• Gym memberships and personal training
• Yoga, wellness apps, and life coaching
• Nutrition services or smoking cessation programs
• Offers more flexibility than an HSA
• Ideal for boosting retention, engagement, and employee well-being
• Can be offered alongside an HSA

What Is a Health Spending Account (HSA)?

A Health Spending Account is an employer-funded benefit that reimburses employees for eligible medical and dental expenses. 

These accounts follow strict rules set by the Canada Revenue Agency (CRA), which means the reimbursements are tax-free for employees and fully tax-deductible for employers. According to a Canadian Life and Health Insurance study, HSAs can reduce employer benefit spending by up to 20% and help employees save up to 40% on healthcare costs they’d normally pay out of pocket.

Common HSA-Eligible Expenses

• Dental exams, cleanings, and orthodontics
• Prescription medications
• Vision care, like glasses or laser eye surgery
• Licensed mental health therapy

HSA in Action

Jason, a project manager at a large construction firm, earns an above-average income, but with three kids, every dollar counts. When his 13-year-old daughter needed braces and his wife needed progressive lenses, Jason braced for a $5,000 out-of-pocket hit.

Instead, he turned to the company’s Health Spending Account, which covered the entire cost.

“We didn’t have to dip into savings or delay care,” Jason said. “It was stress-free. I submitted the receipts online, and the money was in my account a few days later.”

What Is a Wellness Spending Account (WSA)?

A Wellness Spending Account is also funded by the employer, but with one notable difference: it's a taxable benefit for the employee. That means anything spent through a WSA is added to the employee’s income at tax time. Compared to an HSA, the range of eligible expenses is much broader. 

Common WSA-Eligible Expenses

• Gym memberships or home fitness equipment 
• Life insurance and critical illness insurance premiums
• Wellness apps
• Personal development programs 
• Nutrition services and smoking cessation support

WSA in Action

Amira is a UX designer who works remotely from her home in Calgary. While she loves the flexibility of remote work, she often feels isolated and struggles to disconnect at the end of the day. Her employer noticed that several employees were reporting similar challenges during their annual wellness survey.

That’s when the company introduced a $750 Wellness Spending Account.

Amira used hers to subscribe to a virtual yoga app, book a few sessions with an online therapist, and take a sleep coaching course. These weren’t things she would have paid for out-of-pocket, but knowing they were covered made it easy to prioritize her mental and physical health.

“It made me feel like my company really sees me, not just as a worker, but as a person,” she said. “Having access to personalized support made me more productive, less anxious, and honestly, a better team member.”

Can You Have an HSA and a WSA?

Yes, and many employers are now offering both.

A combined HSA and WSA strategy gives employees more flexibility and helps companies offer competitive, holistic benefits. You can think of the HSA as covering the “must-haves” (like dental and prescriptions) and the WSA as covering the “nice-to-haves” (like wellness or fitness goals).

HSA and WSA Working Together 

Sanjay works at a tech startup that offers both an HSA and a WSA. He recently had wisdom teeth removed and used his HSA to cover the $1,200 dental bill. A few months later, he joined a CrossFit gym and signed up for a nutrition coaching program to help manage stress and sleep better, both of which were covered under his WSA.

“I used to think benefits were just about medical stuff. Now I see them as a way to take care of my whole self.” Sanjay’s employer offered flexible support that met his real-life needs. That kind of investment builds loyalty and retention in a way salary alone can’t.

Choosing the Right Spending Account

If you are trying to decide which spending account to offer, start by thinking about what you’re trying to achieve and who you want to support.

If your goal is to provide tax-efficient, essential health coverage like dental, prescriptions, and vision care, an HSA is the clear choice. It’s fully tax-deductible for organizations and non-taxable for employees, making it a robust, cost-effective, low-fuss solution.

If you're looking to boost engagement, retention, and overall well-being, a WSA offers more flexibility. It can cover things that don’t qualify under CRA rules but make a big impact on employee satisfaction.

Offering both gives you the best of both worlds: structure where it’s needed and flexibility where it counts.

Pro Tip: If you really want to know what kind of plan will have the biggest impact, ask your employees. A quick survey or conversation will tell you what benefits they’ll use. As a bonus, they’ll love that you included them in the decision!

Build a Better Benefits Plan with HSAs and WSAs

Health Spending Accounts (HSAs) and Wellness Spending Accounts (WSAs) each bring unique value to your group benefits package. 

To get it right, it pays to work with an expert. A qualified advisor will help you stay compliant with CRA guidelines, design a plan that fits your budget, and make sure the benefits deliver real value. 

Fill out our contact form, and we’ll be in touch to help you start building a smarter, more effective benefits plan today. The best part? It’s a free, no-obligation chat!