Can i pay for my cobra insurance with an hsa

[Fern · Accepted solution]

Yes, COBRA premiums can be paid from an HSA.

Generally, health insurance premiums cannot be paid from an HSA.  Exceptions are granted if if you are collecting federal or state unemployment benefits, or you have COBRA continuation coverage through a former employer.

https://www.irs.gov/publications/p969/ar02.html

[ss-mendo-munny]

What about COBRA through a current employer?

[Critter-3]

You can’t deduct qualified medical expenses as an itemized deduction on Schedule A (Form 1040 or 1040-SR) that are equal to the tax-free distribution from your HSA.   https://www.irs.gov/publications/p969

Insurance premiums.

 

You can’t treat insurance premiums as qualified medical expenses unless the premiums are for any of the following.

1. Long-term care insurance.

2. Health care continuation coverage (such as coverage under COBRA).

3. Health care coverage while receiving unemployment compensation under federal or state law.

4. Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).

[Opus 17]

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@ss-mendo-munny wrote:

What about COBRA through a current employer?

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The question doesn't make sense.  COBRA is the continuation of health insurance benefits after a qualifying event, usually after you quit or are terminated.  

If you are currently employed, and participating in a group health insurance plan from your current employer, then your share of your premiums are probably deducted from your paycheck pre-tax and you can't take any further tax benefit or deduction.  Even if they are not deducted pre-tax, you can't pay the premiums for insurance with your currently employer from an HSA. 

If you left employment with employer A, they are required to offer you to continue your insurance coverage for up to 18 months, although they can require you to pay the full premium instead of only the employee share.  This is COBRA coverage and you can pay the premiums from an HSA.  If you do so, you can't list them as a tax deduction on your return.

If you left employment with employer A and started work for employer B, and you haven't joined B's health insurance yet and are still paying premiums to employer A, that's still COBRA coverage eligible for reimbursement from your HSA.  If B is providing your insurance now, that's not COBRA coverage. 

[ss-mendo-munny]

I'm currently employed by the same employer that I had coverage through...but I no longer work enough hours to have them provide me with health insurance...so I am paying the health insurance on my own through cobra. On the COBRA forms: "Qualifying Event: Reduction of Hours".

[Opus 17]

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@ss-mendo-munny wrote:

I'm currently employed by the same employer that I had coverage through...but I no longer work enough hours to have them provide me with health insurance...so I am paying the health insurance on my own through cobra. On the COBRA forms: "Qualifying Event: Reduction of Hours".

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OK, then assuming you are paying out of pocket, and not via payroll deduction, you can use your HSA.

If you are paying via payroll deduction, your premiums are probably already pre-tax, and since they aren't being taxed, you can't reimburse yourself from a tax-free account.  You could ask your employer to stop taking premiums from your paycheck and let you pay out of pocket instead, and then you could use the HSA.

[ss-mendo-munny]

thanks...not coming out of my paycheck...I pay on the COBRA website