Can You Use Hsa To Pay Insurance Premiums

Tin can I Pay My Insurance Premiums From My HSA?

A limited amount of long-term care premiums can be paid from HSAs.

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Health savings accounts offering tax benefits for saving for future health costs. However, not all medical insurance premiums are allowed as qualified expenses when you lot take withdrawals. If y'all have coin out and use it on not-qualified premiums, yous're going to be on the hook for extra taxes and penalties on the distribution.

Qualified Premiums

Just certain insurance premiums count every bit qualified expenses from your HSA. Eligible premiums include long-term care insurance, continuation insurance such every bit COBRA, wellness care while yous're receiving unemployment under country or federal police force, and Medicare coverage afterwards yous turn 65. When y'all take distributions to pay these costs, similar any other qualified expense, the money comes out tax-free and penalty-complimentary from your HSA.

Limits on Qualified Premiums

The long-term care insurance premiums you can count as qualified expenses are limited based on the age of the beneficiary. For example, if the beneficiary is nether 40 at the stop of 2012, you tin but count upward to $350 as a qualified expense. Payments for standing insurance and insurance while y'all're unemployed are qualified, and that includes premiums you pay for your spouse and your dependents. However, if you're under 65, you can't use your HSA to pay for your spouse's Medicare fifty-fifty if your spouse is over 65.

Non-Qualified Expenses

Y'all can accept money out of your HSA for other insurance premiums, simply those withdrawals count equally nonqualified withdrawals. As a issue, yous take to pay taxes and a 20 percent penalty on the withdrawal. There are limited exceptions from the penalisation, such as if you're permanently disabled, over 65 years erstwhile or taking distributions every bit a beneficiary, but those won't exist tax-free -- but penalisation-complimentary.

Tax Reporting

Whether your insurance premiums authorize or not, you even so take to report the distribution on your taxes. If you spend the money on qualified insurance premiums, report the withdrawal on Grade 8889. If it'southward not qualified, you must also effigy the xx pct early withdrawal penalty on Grade 8889 and include the distribution on line 21 of Class 1040 every bit taxable income. It's taxed just similar other ordinary income -- the higher your tax bracket, the more you pay.

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