Author Topic: HSA & premiums question - short  (Read 1655 times)

rubybeth

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HSA & premiums question - short
« on: August 12, 2015, 09:56:16 AM »
I don't have time to dig right now, but I am pretty sure you can't use the money in your HSA to pay for health insurance premiums (without paying the penalty). Is this true? I know it was true many years ago, but not sure if the ACA or anything else has changed this. If you can reference the IRA rules or anything else to back this up, that would be very helpful. Thanks in advance!!

Trudie

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Re: HSA & premiums question - short
« Reply #1 on: August 12, 2015, 10:00:07 AM »
Read at the IRS website, and the specific publication on HSAs for answers to this (and related) questions:
http://www.irs.gov/uac/About-Publication-969

happypup

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Re: HSA & premiums question - short
« Reply #2 on: August 12, 2015, 10:08:03 AM »
Relevant section to your question (pg 8):

Insurance  premiums.
You  cannot  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)

jda1984

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Re: HSA & premiums question - short
« Reply #3 on: August 12, 2015, 10:19:19 AM »
RubyBeth--perhaps your employer offers a Section 125 Cafeteria plan to cover the premiums.  I think it works pretty much the same way as an HSA (reduces your gross income, so reduces taxes and FICA).  Plus, it doesn't take up any of your HSA tax-deferred space so you can contribute the max to save for later.

rubybeth

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Re: HSA & premiums question - short
« Reply #4 on: August 12, 2015, 10:27:43 AM »
Thanks, everyone! I was asking for a co-worker who is going to be retiring in the coming years (at a normal-ish retirement age).

RubyBeth--perhaps your employer offers a Section 125 Cafeteria plan to cover the premiums.  I think it works pretty much the same way as an HSA (reduces your gross income, so reduces taxes and FICA).  Plus, it doesn't take up any of your HSA tax-deferred space so you can contribute the max to save for later.

My insurance coverage situation is kind of weird; if I took my employer's coverage, it would go through the Section 125 situation, but I buy my coverage via my state's exchange, so that isn't possible (only dollars I spend on my employer's benefits package can go through the Section 125--maybe other employers are different, but I've never heard of being able to what you are suggestion). But I use my benefit dollars for maxing out my HSA and nearly maxing out my Deferred Comp/457b instead, so I come out way ahead this way (like thousands of dollars a year).