Can an individual use HSA funds to pay insurance premium expenses?
Some insurance premiums are considered qualified medical expenses. An individual can make a qualified HSA distribution for the following insurance premiums:
- Health plan coverage while receiving federal or state unemployment benefits.
- COBRA premiums.
- Medicare premiums (Part A, B, C or D. Not Medicare supplement or Medigap plans).
- Premiums for qualified, long term care insurance (dollar limits may apply).
An individual is allowed to spend the money in their HSA for any reason, but if the funds are used for anything other than a qualified medical expense, the funds are subject to normal income tax, and if the accountholder is under age 65, a 20 percent penalty.