Can I have Medicare and an HSA ?

There are rules against having Medicare and an HSA (Health Savings Account).

I have recently gotten calls from two people who have Health Savings Accounts through their employers. They plan to keep working and they want to keep their employer health insurance.  But they are running into trouble because of their employer-supported HSA.

If you are working and have decent employer health insurance, you don’t need to sign up for Medicare Part B. But… you will automatically get Medicare Part A unless you fill out a form to decline Part A.

The folks who called me were running into trouble because they didn’t realize they had to decline Medicare Part A if they wanted to keep contributing to their HSA – and have their employer contribute too.

It was all very confusing, so I did some research.

Here is info from the Medicare.gov website on having Medicare and an HSA

Most people should enroll in Medicare Part A when they turn 65, even if they have health insurance from an employer. This is because most people paid Medicare taxes while they worked and therefore do not pay a monthly premium for Part A.

However, some people may want to consider delaying Medicare Part A until a later date, such as people who contribute to a Health Savings Account (HSA) or those
who have to pay a premium for Part A.

Once you enroll in any part of Medicare, you won’t be able to contribute to your HSA. If you would like to continue making contributions to your HSA, you can delay both Part A and Part B until you (or your spouse) stop working or lose that employer coverage. You will NOT pay a penalty for delaying Medicare, as long as you enroll within 8 months of losing your coverage or stopping work (whichever happens first). You should talk with your employer benefits manager about whether it makes sense to delay Part A and Part B.  

Health savings accounts (HSAs) are a special kind of tax-deferred account available only to people who have a high-deductible health plan. HSAs are not the same as a flexible spending  account (FSA) or health reimbursement account (HRA). If you aren’t sure if you have an HSA, ask your benefits administrator or plan.

 Here is more info on having Medicare and an HSA from the Medicare Rights Center:

If you choose to delay Medicare enrollment because you are still working and want to continue contributing to your HSA, you must also wait to collect Social Security retirement benefits. This is because most individuals who are collecting Social Security benefits when they become eligible for Medicare are automatically enrolled into Medicare Part A. You cannot decline Part A while collecting Social Security benefits. The takeaway here is that you should delay Social Security benefits and decline Part A if you wish to continue contributing funds to your HSA.

Finally, if you decide to delay enrolling in Medicare, make sure to stop contributing to your HSA at least six months before you do plan to enroll in Medicare. This is because when you enroll in Medicare Part A, you 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.

Two years ago, I wrote about what an HSA can be used for: https://medicareblog.org/medicare-and-hsa/

Here is more info on working past 65 and Medicare:  https://medicareblog.org/working-past-65-and-medicare-part-d/

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