People who have HSA plans are often confused about whether to enroll in Medicare at age 65. The IRS, however, does not allow you to continue contributing into an HSA plan when you are enrolled in any part of Medicare, so in this sense HSA and Medicare do not go together.
However, if you delay enrollment into Medicare, you and/or your employer can continue to contribute into your health savings account. Just be sure that you do not enroll into ANY part of Medicare and also do not enroll into SS income benefits because this automatically triggers Part A. You cannot have one without the other.
Where HSA plans do go well with Medicare is in spending your HSA dollars after you have retired. You can use a special election period to enroll in Medicare Parts A, B an D. The funds you have saved up in your HSA can be used to pay Medicare premiums, deductibles, copays and coinsurance as well as dental, vision and hearing expenses.
HSA plans have many benefits. As an individual with a high-deductible health plan, you get to enjoy premiums that are considerably lower than a regular health insurance plan. However, that’s not the only benefit. When you open the health savings account that goes alongside your health insurance, you now have an opportunity to contribute money into the account tax-free. This means that you pay no income taxes or Social Security/Medicare taxes on that money.
You also pay no taxes on the money when you pull it out for qualified medical expenses, which include dental and vision expenses. You can even use funds in your health savings account to pay for qualified medical expenses of your dependents, whether they are on the health insurance policy with your not.
What’s more is that this money is yours forever. It compounds over time and can grow into a really great nest-egg of money that you can use for medical expenses, including Medicare premiums, during retirement.
With all of these great benefits, it’s easy to see why someone working at age 65 wants to continue contributing into their health savings account as long as possible. You just have to be aware that you can’t keep contributing into that HSA if you enroll in any part of Medicare.
What if you didn’t realize this and have already signed up for Part A and Social Security income benefits? You would need to stop contributing to the health savings account. However, you can use the funds that are already in your health savings account for qualified medical expenses until you exhaust the account.
Do not attempt to cancel Part A that is already in force. It can have dire consequences to your Social Security income benefits. (You cannot cancel Part A after beginning your Social Security benefits. If you do, you’ll have to pay back all of the money you have already received from Social Security.)
Instead, you can just use the funds that were already in the savings account toward Medicare Part A, B and D premiums. Funds can also be used for ordinary approved medical expenses, such as doctor visits, labwork, etc
If you have not yet enrolled in Social Security income benefits, you can withdraw your application for Medicare Part A. Please note that later on whenever you decide to apply for Social Security income benefits, it will automatically trigger your enrollment into Part A retroactively for 6 months.
You’ll need to speak with your accountant about any penalties you may owe for contributing into your HSA over the prior six months. Plan ahead for when you will enroll in Social Security income benefits. Then discontinue contributions into your HSA 6 months before you apply for income benefits and trigger your Part A enrollment.
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HSAs can be tricky when you are eligible for Medicare! Do you have a question about contributions? Type it here and we’ll answer.
Just to be clear, if a husband is the one with an HSA and his wife is on his insurance, if the wife got Medicare, the husband can still contribute to his own HSA?
That’s correct, and he can contribute the entire family amount since he has dependents. There just can’t be any contributions in here name.
+Boomer Benefits In this same scenario, can the funds from the HSA be used towards the wife’s medical expenses, even though she can’t contribute to the HSA?
+Elaine Moreland yes
My husband turned 65 last year. I will be 65 in June this year. He delayed Part A so we could both stay on his employer’s HSA plan. Can we deposit the yearly 2019 maximum HSA contribution now, and then both go onto Medicare later in the year? Do we have to wait 6 months after our last contribution to the HSA? Since we are covered by the employer’s plan, do I have to go on Medicare 3 months after my birthday, or can I start it anytime? Thank you for your help.
Yes, he can contribute the family maximum. You will just want to not contribute into the HSA at least 6 months before you guys enroll in Medicare. You can delay enrolling in Medicare until you lose his employer coverage. Fast forward to 4:40 in the video for a refresher on your situation. You can also visit the IRS website for more information.
Thank you much. And am I correct that because we are covered by his work plan, we don’t have to enroll in Medicare within that 3 month window before and after our birthdays? We can enroll, say 5 months later, or whenever we discontinue his employer’s coverage even though he will continue to work?+Boomer Benefits
+muglady Yes you are correct – as long as the employer has 20+ employees
First of all thanks for your videos! Turned 65 first of this month and plan on working until end of 2020. Have HSA so need to stop contributions by end of June 2020, right? And do I need to contact SS for anything about delaying medicare Parts A & B?
My understanding is I do nothing until 1-2 months before retiring.
Correct, at least 6 months before you enroll in Medicare. No. You will not need to contact SS to tell them you are delaying Medicare. Once it comes time for you to enroll, that will be when you explain to them and document why you delayed Medicare.
+Boomer Benefits thank you. I will be contacting you in 2020 to set things up!!!
+Kenneth Jenkins Sr We look forward to helping you!
+Kenneth Jenkins Sr You are welcome! We’ll be here when you need us!
Where is the HSA worksheet? Can you send it to me or provide a link to it? Thanks!
Hi Darryl, it’s in the description on the video. https://boomerbenefits.com/hsa-checklist
Very interesting – thinking about retiring early, right now in an HSA/high deductible plan. The comment about enrolling in SS triggering part A made me woner- if i enroll early (at 63) for SS, does that mean I’m covered under Medicare at that time? i thought that was not an option until 65.
No. You can not get Medicare until you are at least 65 (unless you are disabled). However, once you turn 65, you will be auto enrolled in Medicare if you already have SS benefits.
Just to clarify, enrolling in SS early does NOT trigger Medicare? I want to be sure I understand any impacts on insurance choices I make between retirement and Medicare age. Thanks!
+laurab0605 Correct, you are not eligible for Medicare until 65 unless you qualify early due to a disability for which you are receiving SS disability income benefits
I know that Medicare premiums can be paid with an HSA. Somewhere I read that you had to personally pay the premiums and then reimburse yourself from your HSA account. Is that true and if it is, why would that be necessary? Can I just set up my premiums to come directly out of my HSA account? And I don’t plan on taking SSI benefits yet- once I do, will the premiums automatically come out of my SSI montly benefit?
If you aren’t taking SSI yet, then normally SS bills you quarterly for your Part B premiums, so in that case you would reimburse yourself. However you can also call SS to set up monthly autodraft of your Part B premiums and yes you could do that from your HSA bank account if your bank allows it. When you later sign up for SSI, they will revert to taking that monthly from your SS check, and in that case you could again reimburse yourself.
I have what I believe is a HSA through my employer, but it seems mine is a little different. I select how much I want to put in the account in November, then come January the money is available. This year the max was $2550.00 that amount goes on a credit card Jan. 1st and we can use any or all any time. My company then deduct that amount from 26 pays, it is not taxed. Any money left in the account come 12/31 is forfeited. Is this type account different from what you were talking about in the video?
Hi Paul, that sounds like an FSA, which is a type of account that doesn’t roll over each year and doesn’t require you to first have a high deductible heatlh plan like the HSA would.
Will I be able to keep it for a couple more years even if I sign up for medi care this year?
+Paul Clark Yes. There are no problems with having an FSA and Medicare
I’m on my wife’s work insurance and plan to stay on it until she retiers. I know that I can go on medicare at that time. My question is are the supplemental insurances required to accept me for the 6 month timeline? I might also add I’m already getting SS starting at 62.5 years.
Thanks, Bob
HI Robert, if your wife works for a company with at least 20 employees, you can delay enrollment into Medicare Part B until you retire and then your Part B effective date triggers the 6 month Medigap window
I also need to know since I’m on my wives work insurance do I need to send a notice to someone to delay Part A?
Thanks, Bob
No you just simply do not enroll
Great information! Information is power, and you’re helping a lot of senior citizens take the power back with making their healthcare decisions! This could save people a lot of money and headache!