HSA— Medicare

There are a number of factors that may impact your HSA usage when you enroll in Medicare.

Updated over a week ago

It is important to understand how your enrollment in Medicare can impact your Health Savings Account.

Read on for additional information on HSA and Medicare eligibility, or click here to jump to a topic:

Using your HSA when you are enrolled in Medicare

Once you are enrolled in Medicare, you are not eligible to open a Health Savings Account (HSA), contribute to an HSA, or receive employer HSA contributions.

However, you can still spend your existing HSA funds tax-free on qualified medical expenses for you, your spouse, and your tax-qualified dependents. If you (the account holder) are over 65 and you distribute money for expenses other than qualified medical expenses, it is subject to income tax, but no other penalties apply.

As long as you are 65 years old or older, you can use your HSA to pay for Medicare premiums and out-of-pocket expenses (including deductibles, copays and coinsurance). This applies to Medicare Parts A, B, C, and D. Prescription drug premiums are only valid HSA expenses if they're part of Medicare Part D.

If you are not 65 years old or older, Medicare premiums for a spouse or dependent are not a qualified medical expense.

Delaying Medicare enrollment and continuing to contribute to your HSA

If you delay your enrollment in Medicare, you can continue to make contributions past the age of 65, as long as you are still covered by an HSA-qualified High Deductible Health Plan (HDHP). In addition, you can continue to make $1,000 yearly catch-up contributions starting at age 55.

Please note:

  • If you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you plan to enroll in Medicare. The reason is that when you enroll in Medicare Part A, you may receive up to six months of retroactive coverage, not going back farther than your initial month of eligibility.

  • If you do not stop HSA contributions at least six months before Medicare enrollment, you may incur a tax penalty.

  • Consult a tax professional for counseling about HSAs.

HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.

Does my spouse's enrollment in Medicare impact my HSA?

Your spouse's enrollment in Medicare does not affect your ability to use your HSA. If you are covered by an HSA-qualified HDHP and are not enrolled in Medicare, you can still make contributions and use HSA funds to cover qualified medical expenses, even your spouse's.

Your spouse's Medicare coverage does not affect the ability to fully contribute to your HSA. If you have family coverage and your spouse is on Medicare, you may still contribute the family maximum contribution amount to your HSA.

How do I use HSA funds to pay for Medicare premiums?

You can submit claims for Medicare premiums online. Follow the steps below to submit claims for reimbursement:

  1. From your account dashboard, select Reimburse Me or Pay Provider.

  2. You will need to submit proof of coverage and proof of payment. For proof of payment, it needs to be a statement showing you have paid for the premium. For example: a statement from your insurance provider, the front and back of a cashed check, or a bank statement. If the payment is taken out of your Social Security check you can send in your Social Security statement or SSA-1099 form as proof of coverage and proof of payment.

  3. For the expense type, please choose Premium. Follow steps to upload documentation and submit the claim.

To set up a recurring monthly payment, you can submit the Cost of Living statement from the Social Security Administration and set the time frame for the entire year. For example: select 01/01/21 - 12/31/21 to be automatically reimbursed every month in 2021.

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