Unemployment sucks.  In my opinion it does anyway.  And with it come a lot of challenges.  More specifically, if you find yourself, your spouse of a friend or family member unemployed, one of the big challenges is health care.

Did you know that if you or your spouse has an HSA, there are a couple of things to think about which might help you financially during while you are looking for work?

You may not be aware of this but High Deductible Health Plan premiums may be funded from an individual’s HSA in two instances.  First if your HDHP is part of your COBRA continuation coverage, then premiums may be paid from your HSA.  Secondly, if you are receiving State or Federal unemployment benefits then you can pay your HDHP premium from your HSA.

It’s important to keep 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 meaning 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.

But wait there’s more.  What if you have an individual HDHP with an HSA and your spouse, covered under their own employer sponsored insurance is laid off?  Did you know that under the rules of HSAs you may pay for your spouse’s COBRA Premium from your HSA?  Yep, that one was a piece of good news to me.  Whodathunkit?