I'm self-employed (sole proprietorship), so my spouse and I have been receiving medical coverage through her W-2 job. My spouse was recently laid off and we plan to continue our high-deductible plan coverage through COBRA, at least for the short-term (her employer is subsidizing the employer cost for a period).
Can we still contribute to a health savings account (HSA) if on a qualifying HDHP through COBRA? Do we have to use my spouse's existing HSA provider or can we choose to fund an HSA through another provider?
I recognize that even if we can still contribute to the HSA, we are not realizing the full tax savings, as an employer sponsored HSA also reduces FICA/payroll taxes.
Can I also deduct the COBRA premium payments as a small business owner?
1. Yes, you can still contribute to a HSA if you have a HDHP even through Cobra.
2. You can fund your HSA account through the administrator of your choice.
3. You can't deduct the Cobra premiums as Self-employed Health Insurance, as the IRS requires that the health insurance be in the name of the self-employed person or the business's name.
The policy cannot be through your spouse's employer.
The IRS says in this document page 1:
For self-employed individuals filing a Schedule C (Form 1040) or F (Form 1040), a policy can be either in the name of the business or in the name of the individual.
But you can deduct them as Medical expenses if you itemize deductions.
1. Yes, you can still contribute to a HSA if you have a HDHP even through Cobra.
2. You can fund your HSA account through the administrator of your choice.
3. You can't deduct the Cobra premiums as Self-employed Health Insurance, as the IRS requires that the health insurance be in the name of the self-employed person or the business's name.
The policy cannot be through your spouse's employer.
The IRS says in this document page 1:
For self-employed individuals filing a Schedule C (Form 1040) or F (Form 1040), a policy can be either in the name of the business or in the name of the individual.
But you can deduct them as Medical expenses if you itemize deductions.