Important Information for Employees with an HSA Approaching Medicare Eligibility
For employees who currently have a Health Savings Account (HSA) and will soon be eligible for Medicare, it is crucial to understand how enrolling in Medicare will impact your HSA.
Enrolling in Medicare when you have an HSA
If you enroll in Medicare Part A and/or B, you can no longer contribute pre-tax dollars to your HSA. The month your Medicare begins, you should change your contribution to your HSA to zero dollars per month if you plan to enroll into any portion of Medicare.
It is important to note that you can continue to withdraw money from your HSA even after enrolling in Medicare. These funds can be used to pay for various medical expenses, including deductibles, premiums, copayments, and coinsurances. As long as you use the account for qualified medical expenses, the funds will remain tax-free.
Delaying Medicare Coverage
If you are still working and have health coverage through a large employer (over 20 full-time employees), this coverage will pay primary to Medicare. This means you may choose to delay enrolling in Medicare and continue contributing to your HSA.
When you decide to delay enrollment into Medicare, make sure to stop contributing to your HSA at least six months before you do plan to enroll. When you enroll in Medicare Part A after age 65, 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 for the amount contributed in that time.
To Learn More
To learn more about Medicare eligibility can be affected by an HSA click here. Stay informed, stay healthy, and let OneGroup be your trusted partner in navigating Medicare. Click here to get in touch OneGroup’s Medicare team for more information.
We are not a government agency. We are licensed insurance agents who discuss insurance programs such as Medicare Advantage, Medigap, and Medicare Part D Prescription Drug Coverage. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-Medicare to get information on all of your options.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
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