Did You Know: Health Savings Accounts

There is a lot of confusion around what you can use your Health Savings Account (HSA) money for, especially after leaving a job. That may be because it works differently depending on the coverage that you have, group, COBRA, Pennie, or Medicare. We know you can use it for medical expenses, however we often get the question if that includes your monthly premium.

Insurance premiums

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

• Long-term care insurance. The premiums for long-term care insurance that you can treat as qualified medical expenses are subject to limits based on age and are adjusted annually. See Limit on long-term care premiums you can deduct in the Instructions for Schedule A (Form 1040).

• Health care continuation coverage (such as coverage under COBRA). Can be for your spouse or a dependent meeting the requirement for that type of coverage.

• Health care coverage while receiving unemployment compensation under federal or state law. Can be for your spouse or a dependent meeting the requirement for that type of coverage.

• Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap). If you, the account beneficiary, aren’t 65 or older, Medicare premiums for coverage of your spouse or a dependent (who is 65 or older) aren’t generally qualified medical expenses.

Health coverage tax credit

You can’t claim this credit for premiums that you pay with a tax-free distribution from your HSA. See Pub. 502 for more information on this credit.

Learn more: https://www.irs.gov/publications/p969#en_US_2023_publink1000204086