How does a health spending account work for a business owner or employer?

You set an annual amount for each person, which should be reasonable for their role. When you or an employee has an eligible expense, the claim goes to the plan administrator with the receipt. Once it’s approved, the person is reimbursed tax-free, and your business is billed the claim plus an administration fee and any applicable provincial taxes, as a deductible business expense. An HSA works through an incorporated business: sole proprietors fall under different tax rules, with conditions, so speak with your accountant.