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Health Savings Account Medicare

Posted on Friday, January 19, 2024 in Health Savings Accounts

Will Signing Up for Medicare Impact my HSA?

Can I have a health savings account and Medicare?

When it comes to healthcare planning, many individuals are seeking ways to maximize their savings while ensuring comprehensive coverage. One popular option is having a health savings account (HSA) in conjunction with a health plan. However, concerns may arise when it comes to signing up for Medicare. Will enrolling in Medicare affect your HSA? Let's explore this question further.

A health savings account (HSA) is a valuable tool that allows individuals to save money tax-free for medical expenses. It is only available to those with a high-deductible health plan (HDHP). The HSA contributions are tax-deductible, and the funds can be withdrawn tax-free as long as they are used for qualified medical expenses. It's important to note that Medicare is not considered an HDHP, so you cannot contribute to an HSA once you enroll in Medicare. However, this does not mean you have to give up your HSA altogether.

When should I stop contributing to my HSA?

As soon as you become eligible for Medicare, you should stop contributing to your HSA. This is because Medicare is not an HDHP, and the rules surrounding HSA contributions are strict. If you continue to contribute to your HSA while on Medicare, you may face tax penalties. It's important to be aware of the eligibility criteria for an HSA. To contribute to an HSA, you must have an HDHP and not be enrolled in any other health coverage, including Medicare. Once you enroll in Medicare you are no longer eligible to contribute to an HSA.

While you can no longer contribute to your HSA once you're on Medicare, you can still use the funds in your HSA account for qualified medical expenses. This is an important distinction to understand.

Your HSA funds are not lost when you enroll in Medicare. You can continue to use them to pay for medical expenses, including deductibles, copayments, and prescription drugs. Additionally, HSA funds can be used to pay for Medicare premiums, including Part B, Part D, and Medicare Advantage premiums. This can provide significant financial relief for individuals on a fixed income.

What qualifies as an HSA eligible expense after I'm on Medicare?

The IRS has a broad list of expenses it considered as qualified expenses for HSAs. Some are obvious, like medical, dental, or vision expenses. Common HSA-eligible expenses are those not covered by regular health insurance, such as copayments and medical supplies. Other expenses are less obvious, like acupuncture, blood pressure monitors, flu shots, over-the-counter cough medication, and hearing aids.

HSA savings can also be used to pay for premiums for Medicare Parts A, B, C, and D. They can’t be used for Medicare Supplement Insurance Premiums.

When you’re 65 and older, you can also use HSA money to pay premiums for employer-sponsored healthcare.

Refer to IRS Publication 969 if you have questions about expense eligibility.


Signing up for Medicare does impact your ability to contribute to a health savings account (HSA). Once you enroll in Medicare, you are no longer eligible to contribute to an HSA. However, this does not mean you have to give up your HSA altogether.

The funds in your HSA can still be used tax-free for qualified medical expenses, including Medicare premiums. This provides individuals with a valuable resource to help cover healthcare costs even after enrolling in Medicare. By understanding the rules and regulations surrounding HSAs and Medicare, individuals can make informed decisions to ensure their healthcare needs are met while maximizing their savings.

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