Can I Pay COBRA Premiums with HSA? - Understanding HSA Rules

If you have a Health Savings Account (HSA), you may be wondering whether you can use it to pay for COBRA premiums. COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, allows you to continue your employer-sponsored health insurance coverage for a limited time if you lose your job, have reduced hours, or experience other qualifying events.

Here's what you need to know about using your HSA to pay for COBRA premiums:

• You cannot use your HSA to pay for regular health insurance premiums while you are employed, but COBRA is an exception to this rule.
• Under COBRA, you are eligible to use your HSA to pay for premiums during the period of continuation coverage.
• COBRA premiums are considered an eligible expense under IRS regulations, making them a qualified expense for HSA funds.
• Using your HSA to pay for COBRA premiums can provide a tax-advantaged way to continue your health coverage when transitioning between jobs or facing other qualifying events.

It's important to remember that while you can use your HSA to pay for COBRA premiums, there are specific rules and limitations to consider. Make sure to consult with a tax professional or financial advisor for personalized guidance based on your individual situation.

Many individuals find themselves asking if they can pay COBRA premiums using their Health Savings Account (HSA). The answer is that while your HSA cannot cover regular health insurance premiums during employment, there is a silver lining for COBRA participants.