Medicare and Health Savings Accounts (HSA)

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The decision to stay on your employer group plan or switch onto Medicare often comes down to Health Savings Account (HSA) questions.

If you have an HSA, you'll want to make sure you read this article to understand how Medicare and HSAs work together. Misunderstanding the rules Medicare has around HSAs could result in you having to pay some penalties. 

What Happens to my HSA?

If you move to Medicare at 65:
If you sign up for Medicare when you turn 65, the Internal Revenue Service (IRS) requires that both you and your employer discontinue contributions to your HSA once you enroll in Parts A or B.

Depending on your arrangement with your employer, this could be a substantial amount that you receive each year from your employer and may affect whether or not coming off your company insurance and switching to Medicare is a wise financial decision for you.

If you move to Medicare after 65:
If you enroll in Medicare after your 65th birthday month, Medicare will look back to your 65th birthday month OR six months (whichever is closest) to see if contributions to your HSA were discontinued.

HSA dollars previously accumulated may be used for future qualified expenses as well as your Part B premiums, your Part D premiums, and your Medicare Advantage plan premiums. 

HSA dollars cannot be used to pay for Medicare Supplement (Medigap) plan premiums. 

Wrapping it up

Whether you've been diligently contributing to an HSA for years, or just recently, Medicare has specific stipulations around what you can and cannot do with your HSA. 

Remember, neither you nor your employer may contribute to your HSA once you enroll in Medicare.  

You may use your HSA funds for qualified medical expenses and Part A, B, C, & D premiums, but not Medicare Supplement plan premiums. 

If you have other questions around your HSA, FSA, or HRA, give us a call. We're happy to help. 

Senior Benefits Insurance Services

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