Can I pay for COBRA premium with my HSA?

by | May 18, 2018 | COBRA, HSA

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Generally speaking, most insurance premiums cannot be covered by an HSA; they are not included on the eligible expense list published by the IRS. However, there are a few exceptions. According to IRS publication 969:

“Insurance premiums.

You can’t treat insurance premiums as qualified medical expenses unless the premiums are for:

  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). “

Yes, COBRA premiums can be paid out of your HSA and you can continue coverage. In addition, if you are unemployed and are receiving unemployment compensation, you can purchase other healthcare insurance with your HSA.

2020 HSA Contribution Limits

The Internal Revenue Service (IRS)  has released the 2020 inflation-adjusted amounts for Health Savings Accounts (HSAs). Contribution limits, minimum deductibles, and the maximum for out-of-pocket expenses all go up next calendar year.

2020 HSA Contribution Limits

Starting January 1, 2020, annual maximum contribution levels will rise for both individual and family coverage. Account holders with individual coverage will be able to contribute $3,550, a $50 increase from 2019. Those with family coverage may contribute up to $7,100, a $100 increase from 2019.

Minimum Deductible for HDHPs

The IRS also raised the minimum deductible for qualified high deductible health plans (HDHPs). In 2020, the individual coverage minimum deductible is $1,400, up $50; the family coverage minimum deductible goes up to $2,800, a $100 increase.

Maximum for Out-of-Pocket Expenses 

The maximum limit for out-of-pocket expenses is going up in 2020, as well. Those with individual coverage will have a $6,900 limit, a $150 increase. Account holders with family coverage see a $300 increase to $13,800.

Catch Up Contributions

The 2020 catch up contribution limit remains the same, at $1,000, for those 55 years of age and older.

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