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I have the option to remain on the previous employer's COBRA for the foreseable future. Their plan is much nicer than what my new employer is offering while being only a little more expensive.

However, the premiums for the new employer's plan will be deducted before taxes, which suddenly makes them a lot cheaper.

Is there any way the COBRA premiums can also be paid with before-tax monies?

I know, that I could deduct them if they exceeded a certain percentage of my income, but (with any luck) they will not...

I do have some money on HSA, but not much -- it would only cover a few months of COBRA-premiums.

Chris W. Rea
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Mikhail T.
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1 Answers1

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COBRA premiums are an HSA eligible expense, per page 8 of IRS Pub. 696:

Insurance premiums.

You can’t treat insurance premiums as qualified medical expenses unless the premiums are for:

[...]

  1. Health care continuation coverage (such as coverage under COBRA).

[...]

Items (2) and (3) can be for your spouse or a dependent meeting the requirement for that type of coverage.

FSA funds, however, cannot be used to pay for COBRA premiums, per page 16 of the same document:

You can’t receive distributions from your FSA for the following expenses.

  • Amounts paid for health insurance premiums.

If your COBRA plan is a HDHP, you can continue to contribute to your HSA. Consequently, you would be able to continue to pay your COBRA premiums on a pre-tax basis, as long as you keep contributing to your HSA.

Guest5
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