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Can we contribute to HSA on COBRA?

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?

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Accepted Solutions
MinhT1
Expert Alumni

Can we contribute to HSA on COBRA?

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.

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1 Reply
MinhT1
Expert Alumni

Can we contribute to HSA on COBRA?

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.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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