At a time when insurance premiums are on the rise, everyone is looking for a way to stretch their health care dollar. One popular inquiry is whether money from a health savings account (HSA) can be used to cover insurance premiums.
The answer is yes, in some cases. The more you understand your HSA, the more you can make your tax-free money work for you. Let’s take a closer look.
What is a Health Savings Account?
An HSA is a tax-exempt account that you or your employer can contribute money to, put towards qualified medical expenses. In order to become eligible for an HSA, you have to enroll in a high-deductible health plan. Your HSA money is yours to keep and will continue to grow tax-free, each year.
Qualified medical expenses, as defined by the Internal Revenue Service could include:
- Hospital services
- Prescription drugs
- Long term care
- Birth control
- Health institute treatment
- And more
What about Insurance Premiums?
An insurance premium is the money charged by an insurance company for coverage. The amount of money charged for your insurance premium is determined by your age, health, residence and more.
Your HSA money can be used toward insurance premiums, but only specific types such as: long-term care coverage, health coverage while you are unemployed and federal health care continuation coverage (COBRA). If you are 65 and older, HSA funds can also be used to pay for any health insurance except Medicare Supplement policies.