Health Savings Accounts & Medical Premiums

Submitted by Brandon Blanchard on Tue, 2024-11-19 14:46

I have a client that is 62. He retired almost 2 years ago. He was on COBRA for 18 months and recently switched to a non-HDHP directly through Blue Cross Blue Shield (he did not select a plan through the exchange). Can he use funds in his existing HSA (he is no longer funding it since he is not covered by an HDHP but he has about a $10k balance) to pay the monthly premiums on this medical plan? Online it appears the answer is no, which I find very strange since HSA funds can be used to pay COBRA and Medicare premiums.



Submitted by Alan - IRA critic on Tue, 2024-11-19 16:32

Per Pub 969, these health premiums are not qualified expenses for HSA distributions unless he still had an active unemployment comp claim. But he could increase his deductible on the current coverage for a reduced premium, then use HSA funds to pay the increased claims he would have as well as the claims he will have under the current deductible.

Submitted by Brandon Blanchard on Wed, 2024-11-20 11:35

My client is 62 and the HSA is in his name. Lets call him Joe. his wife is 66, lets call her Jane. Jane is covered by Medicare. Can Joe pull money out of his HSA now tax and penalty free to pay for his wife’s Medicare B/C/D premiums today? Or does Joe need to be 65 to pull money out of his HSA to pay for Medicare regardless of whether it is for his or his wife’s premiums?

Submitted by Alan - IRA critic on Wed, 2024-11-20 19:43

Per Pub 969, p 9, Medicare premiums for a spouse or dependent at age 65+ are not qualified expenses if the HSA owner is not yet 65.

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