Do you have a Heath Savings Account? Whether you do or don’t, you’ll want to hear this
information!
What is HSA and do I qualify?
An HSA is a health savings account that can pay for medical services, co-pays, dental, vision, and most medical services. To qualify for an HSA, you must be covered under a high deductible health plan (HDHP), have no other coverage, and must not be enrolled with Medicare.
An HDHP has a higher out-of-pocket cost for medical expenses and higher deductibles, but lower monthly payments.
Americans that are 55 years-of-age and older have an estimated total of $52 billion in HSA. Even so, many of those account holders do not have a clear understanding of how Medicare affects HSAs.
Let’s break it down together.
HSA Contributions
The amount of money that you can contribute is based on circumstances such as if you…
· Have an HDHP with no other coverage.
· Are not enrolled in Medicare.
· Cannot be claimed as a dependent on anyone’s taxes
HSA Limits:
Enrolling in Medicare
Once you turn 65 years old, you are eligible to enroll in Medicare. Most are eligible for Part A, which is hospital insurance. On the other hand, Part B is medical insurance that comes with a monthly premium depending on income.
Once you collect Social Security, you cannot decline Part A Medicare.
After You Enroll
1. You lose eligibility to contribute to your HSA.
2. You can still use this money but cannot add any more.
3. Your spouse and adult children can contribute under your plan.
Let’s say you continue to pay into your HSA after you enroll in Medicare. You could be subject to a 6% excise tax.
Don’t worry though! If you withdraw the extra money or spend it on medical expenses before the due date of taxpayer return, there will be no penalty. The IRS does not care when you pay for it, or how you get it out, as long as it’s not there by the due date.
They may request proof of transactions to make sure all the amounts match up for the year.
A rule of thumb is to stop paying into your HSA six months before you enroll on Medicare.
Questions
If you have any questions or concerns regarding Medicare, HSA, or anything related, give us a call at Griffin & Furman, LLC to speak with a member of our team!
Sources:
Kelley C. Long, C. (2025, February 1). How does Medicare enrollment affect HSA eligibility?. Journal of Accountancy. https://www.journalofaccountancy.com/issues/2025/feb/how-does-medicare-enrollment-affect-hsa-eligibility.html?utm_source=mnl%3Acpal&utm_medium=email&utm_campaign=27Feb2025
Health Savings Accounts (hsas) and Medicare. Medicare Interactive. (2023, October 18). https://www.medicareinteractive.org/get-answers/coordinating-medicare-with-other-types-of-insurance/job-based-insurance-and-medicare/health-savings-accounts-hsas-and-medicare
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