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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 Health Savings Account (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 Medicare Part A but have NOT applied for Social Security retirement benefits, you can withdraw your application for Part A in order to continue contributing to your HSA. 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 choose to delay Medicare enrollment so you can continue contributing to your HSA, you must also wait to collect Social Security retirement benefits. When you sign up for Social Security, the government will also sign you up for Medicare Part A. It isn't possible to sign up for Social Security and opt out of Part A.
- Retirement heads up: 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 penalties on your HSA, the IRS rules say you need to stop contributing to your HSA six months before Social Security retirement benefits begin.
You Can Still Spend HSA Funds
Once you're 65 or older, you can use your HSA funds for any reason. Taxes will apply for non-qualified medical expenses, but there's no longer a 20% penalty.
See also:
HSA Contribution Limits
IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
Last updated 5/13/19
