Healthcare coverage under HSA and Medicare: Guidelines, taxes, premiums, and high-deductible plans explained
Using Your Health Savings Account (HSA) with Medicare
Health Savings Accounts (HSAs) and Medicare can work together to help individuals manage their healthcare expenses, but there are certain rules to follow. Here's a breakdown of how HSAs and Medicare intersect:
Contributions: Once you enroll in Medicare, you can no longer make new contributions to your HSA. This is because Medicare coverage is not considered a high-deductible health plan (HDHP), which is required for HSA eligibility.
Eligibility: To be eligible to contribute to an HSA, you must be covered by an HSA-qualified HDHP and not be enrolled in Medicare. Enrollment in Medicare disqualifies you from contributing, but you can still keep and use the funds already in the HSA.
Usage: Even after enrolling in Medicare and stopping contributions, you may continue to withdraw funds from your existing HSA to pay for qualified medical expenses tax-free. These expenses include Medicare premiums (such as Part B, Part D, and Medicare Advantage), deductibles, copayments, and other out-of-pocket costs. Funds withdrawn for non-qualified expenses after Medicare enrollment are subject to income tax and possibly penalties if under age 65.
If you delay Medicare enrollment past age 65 because you have qualified employer-sponsored HDHP coverage, you can keep contributing to your HSA during that delay period until you enroll in Medicare.
When you enroll in Medicare, you might also qualify for a Health Reimbursement Arrangement (HRA), which can be used alongside your HSA for eligible expenses, including Medicare premiums.
Paying Medicare Premiums: A person can use their HSA to pay some Medicare premiums, including Medicare Part B and Medicare Part D, but not Medigap premiums.
Rolling Over Funds: The funds in an HSA can roll over into the next year if not used. This means that if you do not meet your high deductible for the year but have contributed the maximum amount to your HSA, the money can roll over and keep earning interest.
Maximum Contribution Limits: The government limits how much a person can put in an HSA. In 2025, the limits are up to $4,300 for an individual and $8,550 for a family.
In summary, you must stop HSA contributions when enrolling in Medicare but can continue to use your HSA funds tax-free to pay Medicare-related costs. Eligibility to contribute ends with Medicare enrollment, but the account remains yours to use for qualified medical expenses indefinitely.
- After enrolling in Medicare, you cannot make new contributions to your Health Savings Account (HSA) as Medicare coverage is not considered a high-deductible health plan (HDHP), which is required for HSA eligibility.
- You may continue to withdraw funds from your existing HSA to pay for qualified medical expenses tax-free, including Medicare premiums (such as Part B and Part D) and other out-of-pocket costs.
- If you delay Medicare enrollment past age 65 because you have qualified employer-sponsored HDHP coverage, you can keep contributing to your HSA during that delay period until you enroll in Medicare, providing an opportunity for personal-finance management and health-and-wellness maintenance.
