Can you Contribute to HSA on COBRA?

Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses while saving on taxes. One common question that arises is whether you can contribute to an HSA while on COBRA coverage. COBRA, or the Consolidated Omnibus Budget Reconciliation Act, allows you to continue your employer-sponsored health insurance for a limited time after losing your job or experiencing other qualifying events.

So, can you contribute to an HSA while on COBRA? The short answer is yes, but with some limitations. Here's what you need to know:

• You can contribute to an HSA while on COBRA as long as you are still enrolled in a high-deductible health plan (HDHP).
• If you are no longer enrolled in an HDHP while on COBRA, you cannot contribute to an HSA.
• COBRA participants can make HSA contributions just like active employees, up to the annual contribution limits set by the IRS.
• Contributions made while on COBRA are still tax-deductible and grow tax-free, just like contributions made while actively employed.

It's important to note that if you have other health coverage in addition to your HDHP while on COBRA, such as a spouse's health plan, you may be considered ineligible to contribute to an HSA. Make sure to consult with a tax advisor or benefits specialist to understand the rules specific to your situation.

Many individuals are curious about whether Health Savings Accounts (HSAs) can still be utilized during COBRA coverage. The answer is yes! If you're on COBRA but still enrolled in a high-deductible health plan (HDHP), you're eligible to contribute to your HSA just like before.