Understand how Medicare will affect your HSA

Published by Medicare Made Clear®

HSAs & Medicare

Health Savings Accounts (HSA) are great things to have when it comes to paying healthcare expenses. You can build up your HSA with pre-tax contributions and use it for qualified health expenses. But, did you know that by enrolling in Medicare, you can no longer make contributions to your HSA account?

For individuals with qualified employer health insurance who may qualify to delay Medicare enrollment past age 65, it’s especially important to understand how getting Medicare coverage impacts your HSA.

What happens to your HSA once you enroll in Medicare?

This is the important thing to remember about your HSA when enrolling in Medicare: once you enroll in any part of Medicare, you’re no longer eligible to make HSA contributions. This includes Medicare Part A or Medicare Part B – either one will prevent you from contributing further to your HSA.

Many people turning 65 who continue to work may consider getting Medicare Part A since it’s premium-free. But, as stated above, once you enroll in Part A, you can’t make any more pre-tax contributions to your HSA. If you plan to keep working and want to continue building your HSA up, check to see if you’re eligible to delay Medicare enrollment. If you’re receiving Social Security benefits however, Medicare Part A is mandatory.

What to do with your HSA if you get Medicare Part A

If you have to (or choose to) enroll in Medicare Part A, the coverage is retroactive for up to 6 months, but no earlier than your eligibility date. Because of this, you should plan to stop HSA contributions around 6 months before enrolling in Medicare.

You can contribute to your HSA for the months that you were eligible for Medicare and were not yet enrolled.

The good news: You can keep using your HSA funds

Now for the good news! Even after you enroll in Medicare and stop HSA contributions, you are still able to withdraw funds tax-free for qualified medical expenses. You can even use your HSA to pay for some Medicare expenses including your Medicare Part B, Part D and Medicare Advantage plan premiums, deductibles, copays and coinsurance.

Note: HSA funds cannot be used to pay for Medigap premiums.

Consider your options carefully

In summary, once you get Medicare, you’re no longer able to keep contributing to your HSA. You are still able to use the HSA funds for qualified medical expenses, including some Medicare costs. Knowing this, it’s important to think carefully about your Medicare enrollment decisions once you become eligible.

About Medicare Made Clear

Medicare Made Clear brought to you by UnitedHealthcare provides Medicare education so you can make informed decisions about your health and Medicare coverage.

Get the latest

Boost your Medicare know-how with the reliable, up-to-date news and information delivered to your inbox every month.

*All fields required