The folks at HSAeducator received the email below from a visitor to the site.  It's is a nice pat on the back for the website, but the note speaks volumes about the spirit, resiliency, determination and maybe the true face of Americans, contrary to the political posturing that is taking place in our Government at the highest levels.

"First of all thanks for the great site. Your presentation and examples made things much easier to understand than some other sites (including the IRS / Treasury sites) that I visited. I recently lost my job so I'm interested in the option of paying the HDHP premiums from the HSA. What do I need to do as far as record tracking? Is keeping a copy of the bills and the withdrawals from the HSA sufficient?  It seems that I should contribute enough for the HDHP premium each month to the HSA plus a little extra if possible. Then if my expenses were higher than the premium I could pay that out of pocket and once the HSA has enough money I could reimburse myself. Sounds great if I understood your examples properly.

Thanks again for the great site,

Ken"

I'd like to first respond to the letter above by answering the questions put forward and then speak to why I believe this email is important.

To confirm, HDHP premiums may be funded from an individual's HSA in two instances.  First if an individual's HDHP is part of their COBRA continuation coverage then premiums may be paid from their HSA.  Secondly, if an individual is receiving State or Federal unemployment benefits then they may pay their HDHP premium from their HSA.

In terms of keeping track of the withdrawals, with the premium payments in the case of unemployment it is important to keep all of the receipts related to those expenses.   The standard forms for reporting contributions to the IRS are the W-2 and the 5498-SA.   W-2 is issued by the employer and contains a separate entry coded "W" for HSA pretax employer or employee contributions. The 5498-SA is issued by the custodian of the HSA and indicates all contributions to the account and the fair market value of the account.  Custodian also issues a 1099-SA which reports all distributions from the account.  The instructions for the 1099-SA and 5498-SA forms can viewed through this link.  You can also download these forms from the IRS website.

It is also worth noting that during that during a period of COBRA continuation or when one is receiving State or Federal unemployment benefits, the premium expenses may be "shoeboxed."  Shoeboxing is simply a term that means you can reimburse yourself in the future from your HSA (so long as it is in place during the period of unemployment or COBRA continuation) even if the funds weren't in the health savings account when you were actually paying the premium.

There are those in Government who believe that Americans are not able to take care of their own health care, yet the Kens of the world demonstrate a spirit that rises above the rhetoric of the Government.  Ken has stepped up to the plate and is swinging the bat at a 99 mile per hour fastball.  He is willing to take responsibility for his health care in a very matter of fact kind of way.  He is proactively educating himself so that he can make logical decisions to address his needs.  His question regarding "tracking" demonstrates his willingness to be accountable for his decisions and to remain within defined tax guidelines.  He demonstrates a savings mentality.

I could not detect a note of whining, playing the victim, or any expectation that the Government was required, to accomplish his goal of health insurance coverage.  Ken demonstrates the true American spirit.  He is pulling himself up by his bootstraps and moving forward with his life despite the challenge of unemployment and all the uncertainties it creates.  It is the Kens of this country who made it great, who make it great, and who will continue to make it great.

Enough said.