Medicare and HSAs

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You Cannot Contribute to an HSA if You're Enrolled in Medicare

According to the IRS, you cannot contribute to an HSA in any month that you are enrolled in Medicare. If you have an HSA and want to continue working beyond age 65, these are some things to consider:

  • If you have NOT filed an application for either Social Security retirement benefits or Medicare, you can continue to contribute to your HSA until you stop working.
  • If you signed up for Part A but have NOT applied for Social Security retirement benefits, you can withdraw your application for Part A. There are no penalties to do this, and you can reapply for Part A at any future date. Contact the Social Security Administration at 1 (800) 772-1213.
  • If you have applied for, or are receiving, Social Security benefits (which automatically entitles you to Part A), you cannot contribute to your HSA. And it gets costly to back out of this situation.  To opt out of Part A, you would need to reimburse the government for all the money you've received from Social Security payments and anything Medicare has paid towards your medical claims.

The IRS contribution rule only affects the HSA account holder who is 65 or older. Covered spouses, of any age, can continue to use funds for qualified medical expenses. See Contribution Limits.

Retirement Heads Up: when you apply for Social Security retirement benefits, Social Security provides 6 months of "back pay" in retirement benefits if you're 6 months+ beyond your full retirement age (66). This backdates your Part A enrollment date. To avoid the penalties on your HSA, stop contributing to your account six months before you apply for Social Security retirement benefits.

For reference, see:

IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (2017 tax year)

Last updated 3/07/18

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