Most health plan premiums don’t count for HSA spending, with narrow exceptions such as COBRA, unemployment coverage, certain Medicare premiums, and eligible long-term care premiums.
If you’ve got an HSA card in your wallet, it’s tempting to swipe it for every health-related bill that hits your inbox. Premiums feel health-related, so the question makes sense. The IRS draws a tighter line.
This article clears the line in plain terms, then walks through the few times premiums do count. You’ll leave with a quick way to label each premium you pay as “HSA-safe” or “not HSA-safe,” plus a clean recordkeeping routine that holds up if the IRS asks questions later.
Are Health Insurance Premiums Eligible For HSA Under IRS Rules
In general, health insurance premiums are not qualified medical expenses for HSA tax-free withdrawals. That’s the default rule you should assume each time you see the word “premium” on a bill.
There are four big exception buckets that show up again and again in IRS materials: eligible long-term care insurance premiums, continuation coverage (COBRA), premiums while you’re receiving unemployment compensation, and certain premiums after age 65, including many Medicare-related premiums. The IRS spells these out in the Instructions for Form 8889.
So the real question becomes: which premium are you paying, and what’s your situation when you pay it? Get those two pieces right and the answer gets simple fast.
What “Eligible” Means When Paying From An HSA
When you use HSA money, there are two ways to do it:
- Tax-free distribution: You spend HSA funds on a qualified medical expense. You keep proof. The distribution stays out of income.
- Taxable distribution: You spend HSA funds on something that isn’t qualified. That amount gets added to income, and extra tax can apply depending on your age and situation.
Premiums sit in the second category most of the time, so you want to be extra careful before treating them as qualified.
Also, “eligible for HSA spending” and “deductible as a medical expense on Schedule A” are not the same test. A cost can be a medical expense in one place and still fail HSA rules in another. HSA rules are tied to qualified medical expenses plus the special premium exceptions listed by the IRS.
The Four Premium Exceptions That Often Count For HSA
Continuation Coverage Under COBRA
If you lost employer coverage and you’re paying for COBRA continuation coverage, those COBRA premiums can be treated as qualified medical expenses for HSA purposes, based on the IRS exception list in the Instructions for Form 8889.
Practical tip: keep the COBRA election notice, the monthly invoices, and proof of payment together. COBRA paperwork usually labels the coverage clearly, which makes documentation easy.
Health Coverage While Receiving Unemployment Compensation
If you’re receiving unemployment compensation under federal or state law, health coverage premiums during that period may qualify for HSA spending. The IRS calls this out directly in the Instructions for Form 8889.
Two details matter in real life:
- Timing: keep proof you were receiving unemployment compensation for the same period you paid the premiums.
- Coverage type: this exception targets health coverage premiums tied to that unemployment period, not random premiums in a different month.
Eligible Long-Term Care Insurance Premiums
Long-term care (LTC) insurance premiums can qualify for HSA spending, with limits that vary by age. The IRS groups LTC under premium exceptions in HSA guidance, including Publication 969.
Even if you pay an LTC premium that fits the exception, it still needs to be an eligible policy. If you’re not sure what your policy counts as, start by checking the policy documents for the phrase “qualified long-term care insurance” and keep that page with your receipts.
Premiums After Age 65, Including Many Medicare Premiums
Once you’re 65 or older, the rules open up for certain premiums. The IRS lists Medicare and other health coverage premiums for people 65+ as an allowed category, with one widely-cited carveout: Medicare supplement policies (often called Medigap) don’t fall under the allowed premium category in the same way. That boundary shows up in the Instructions for Form 8889.
If you pay Medicare premiums through monthly billing, you can still keep clean documentation. The official How to Pay Part A & Part B premiums page shows common payment paths that create a paper trail.
Premiums That Usually Do Not Count For HSA
Now for the part that saves people from accidental taxable withdrawals: premiums are usually not HSA-eligible when they’re “normal” health plan premiums you pay while working or self-employed, outside the exception buckets above.
That includes common scenarios like:
- Employee-share premiums taken from paychecks for an employer plan
- Marketplace plan premiums in most situations
- Individual plan premiums paid directly to an insurer while you’re employed
- Dental or vision plan premiums, unless they fit one of the narrow exceptions
If you’re on an HSA-qualified high-deductible health plan (HDHP), you’re doing the right thing by funding an HSA. Still, the HSA is mainly meant for out-of-pocket costs like deductibles and coinsurance, not the monthly premium. The Marketplace explains that clearly on its HDHP and HSA pages, including the note that HSA funds generally may not be used to pay premiums on What are Health Savings Account-eligible plans?
That “generally” is doing a lot of work. It’s pointing you back to those IRS exceptions.
How To Classify Any Premium In Two Minutes
When you’re staring at a premium bill, run this quick sequence:
- Name the premium: Employer plan, COBRA, Marketplace plan, Medicare Part B, LTC, dental, vision, or something else.
- Name your situation: Are you receiving unemployment compensation? Are you 65+? Is this continuation coverage? Is this LTC insurance?
- Match to the exception list: If it fits one of the four buckets, treat it as potentially HSA-eligible. If it doesn’t, assume it’s not eligible.
- Save proof before you pay: One screenshot now can save a long weekend later.
This isn’t about being fancy. It’s about not turning a tax-free account into an accidental tax bill.
Next, here’s a broad table you can keep as a reference when you’re sorting premium types.
| Premium Type | HSA-Eligible | Notes To Check |
|---|---|---|
| Employer medical plan premium (payroll deduction) | No | Commonly excluded from HSA premium rules; treat as not eligible. |
| Individual health plan premium paid to insurer | No | Not eligible unless it fits one of the narrow IRS exceptions. |
| Marketplace plan premium | No | Marketplace notes HSA funds generally don’t pay premiums; check exceptions only. |
| COBRA continuation coverage premium | Yes | Allowed premium exception; keep COBRA election notice and invoices. |
| Premiums while receiving unemployment compensation | Yes | Keep unemployment benefit proof for the same months as the premium payments. |
| Qualified long-term care insurance premium | Yes (limits apply) | Confirm policy type; age-based limits can apply; keep policy declaration page. |
| Medicare Part B premium (age 65+) | Yes | Covered under age 65+ premium exception; keep billing statements or SSA records. |
| Medicare Part D premium (age 65+) | Yes | Same exception bucket; keep plan premium notices and payment records. |
| Medicare Advantage plan premium (age 65+) | Yes | Often treated as eligible under the Medicare premium exception. |
| Medigap (Medicare supplement) premium | No | Carved out in IRS materials; treat as not eligible for HSA premium use. |
| Dental or vision plan premium | No | Premiums usually don’t qualify unless tied to an exception bucket. |
Real-World Scenarios People Get Wrong
“My Plan Is HSA-Eligible, So My Premium Must Be Too”
An HSA-eligible HDHP lets you contribute to an HSA. That’s a plan eligibility rule. Spending rules are different. Premiums still don’t qualify in most cases. If you need a reminder straight from the Marketplace side, their HDHP overview says HSA funds generally may not be used to pay premiums on What are Health Savings Account-eligible plans?
“I Can Pay Premiums If I’m Self-Employed”
Self-employed health insurance can be deductible on your tax return in some cases. That deduction lives in a different part of the tax code than HSA qualified distributions. So the deduction possibility doesn’t turn the premium into an HSA-qualified expense by default.
If the premium doesn’t match one of the IRS exceptions, paying it with HSA funds risks turning the withdrawal into taxable income.
“I’m Over 65, So Every Premium Counts”
Age 65+ does open the door for certain premiums, including many Medicare-related premiums. Still, not every premium automatically falls in. The IRS line that trips people up is the carveout for Medicare supplement policies. If you’re paying a Medigap premium, treat it as not HSA-eligible for premium purposes unless you have direct IRS guidance saying otherwise for your case.
“My Medicare Premium Is Deducted From Social Security, So I Can’t Track It”
You can track it. Many people get a yearly Social Security statement and Medicare premium notices. Medicare’s billing and payment pages also point to account tools and payment methods that create records, including the official page on How to Pay Part A & Part B premiums.
Recordkeeping That Makes HSA Premium Decisions Stress-Free
HSA paperwork doesn’t need a big system. It needs a repeatable one.
Keep A Simple Receipt Bundle Per Premium Type
- COBRA: election notice + monthly invoice + payment confirmation
- Unemployment period premiums: proof of unemployment compensation + premium invoice + payment confirmation
- Medicare: premium notices or billing statements + proof of payment
- LTC: policy declaration page + premium invoice + payment confirmation
Save each bundle as a single PDF with the month and premium type in the filename. That’s it.
Match Each Premium Payment To A Clear Exception
If you can’t name the exception in one sentence, don’t treat the premium as HSA-qualified. The four buckets in IRS materials are short on purpose. When a premium qualifies, it usually fits cleanly.
Use IRS Source Pages As Your Rulebook
If you like seeing the rules in the IRS’s own words, keep two documents bookmarked:
- Instructions for Form 8889 for the premium exception list and reporting context
- Publication 969 for broader HSA rules and examples
When you’re unsure, reading the relevant page is often faster than scrolling through forum threads.
A Quick Premium Decision Checklist
Use this checklist when you’re about to pay a premium with HSA funds. It’s designed to stop “close enough” choices that later turn into taxable distributions.
| Question | If Yes | Next Step |
|---|---|---|
| Is this COBRA continuation coverage? | Premium may qualify | Save the COBRA election notice and monthly invoice before paying. |
| Are you receiving unemployment compensation this month? | Premium may qualify | Save proof of benefits for the same month as the premium payment. |
| Is this a qualified long-term care insurance policy? | Premium may qualify | Keep the policy declaration page with the premium receipt. |
| Are you age 65 or older at the time of payment? | Some premiums may qualify | Confirm the premium type is in the allowed bucket in IRS instructions. |
| Is the premium for Medicare Part B? | Premium may qualify | Save Medicare billing records or proof of withholding from benefits. |
| Is the premium for Medicare Part D? | Premium may qualify | Save plan notices showing the premium and the paid amount. |
| Is the premium for Medicare Advantage? | Premium may qualify | Keep the plan’s premium notice plus payment confirmation. |
| Is the premium for a Medicare supplement policy (Medigap)? | Treat as not qualified | Pay from a non-HSA account to avoid taxable HSA distribution risk. |
| Is this a normal employer plan premium from payroll? | Treat as not qualified | Use HSA for deductible, copays, prescriptions, and other eligible costs instead. |
Common Alternatives When Premiums Don’t Qualify
If a premium doesn’t fit an exception, you still have plenty of smart ways to use HSA funds without creating tax trouble:
- Deductible payments for covered care
- Coinsurance and copays
- Prescriptions
- Dental and vision services (the service bill, not the premium)
- Many other qualified medical expenses covered in IRS guidance
That’s where HSAs usually shine: the chunky out-of-pocket costs that show up when care happens, not the monthly premium that keeps the policy active.
How To Avoid The Two Most Costly Mistakes
Mistake 1: Swiping The HSA Card For A Premium Out Of Habit
If you’re set up for autopay, it’s easy to forget what’s being charged. If a premium isn’t eligible, the clean fix is simple: switch that autopay to a non-HSA payment method, then reserve the HSA for eligible spending.
Mistake 2: Saving No Proof Because The Charge “Seems Obvious”
Premium exceptions depend on facts like COBRA status, unemployment compensation, age, and Medicare coverage type. Those facts are easy to show when you saved the documents at the time. They’re a headache when you try to recreate them years later.
A solid rule: if you use HSA funds for a premium, save proof that it matches one of the IRS exception buckets the same week you pay it.
Takeaway You Can Use On Your Next Billing Cycle
When you see a health insurance premium, treat it as not HSA-eligible by default. Then run the four exception checks: COBRA, unemployment period coverage, qualified long-term care, and certain premiums after age 65, including many Medicare premiums. If it fits cleanly, keep proof and pay with the HSA. If it doesn’t, don’t force it.
This approach keeps your HSA withdrawals boring in the best way. No surprises, no scramble, no “wait, was that allowed?” moment at tax time.
References & Sources
- Internal Revenue Service (IRS).“Instructions for Form 8889 (2025).”Lists the narrow categories where insurance premiums can count as qualified HSA expenses.
- Internal Revenue Service (IRS).“Publication 969 (2025).”Explains HSA rules and qualified medical expense treatment, including premium exceptions context.
- HealthCare.gov.“What are Health Savings Account-eligible plans?”Notes that HSA funds generally aren’t used for premiums and describes HDHP-HSA basics.
- Medicare.gov.“How to Pay Part A & Part B premiums.”Shows official payment methods and billing paths that help document Medicare premium payments.