Can we contribute to HSA on COBRA?

[Michael16]

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?

[MinhT1 · Accepted solution]

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.