Pay Health Insurance Premiums From Health Savings Account

published 21 July 2015

I’m leaving my job and keeping my employer’s health insurance through COBRA until I start my new job in a few months. Can I pay the COBRA premiums from my wife’s flexible-spending account or from a health savings account she has from an old job? Does it matter that it’s her account rather than mine?

Can I Contribute to Both an HSA and an FSA?

You can’t use money from a flexible-spending account to pay COBRA health insurance premiums, but you can tap money in a health savings account tax-free for COBRA costs (COBRA is a federal law that lets you continue group health insurance coverage after you leave your job or no longer qualify as a dependent). It doesn’t matter whether it’s your own or your wife’s account. Money in an HSA can be used tax-free for eligible medical expenses for the account holder, his or her spouse, and any current tax dependents.

In addition to COBRA premiums, you can use HSA money tax-free for Medicare Part B, Part D and Medicare Advantage premiums as long as the account holder is age 65 or older. You can also use HSA money for a portion of long-term-care insurance premiums, based on your age (see How Married Couples Can Pay for Long-Term-Care Insurance With HSA Funds for details), and for any health premiums paid while receiving unemployment benefits. Otherwise, regular health insurance premiums – whether for an employer plan or a policy you buy yourself – are not an HSA-eligible expense.

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Ask Kim

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.