When you enroll in Medicare, HSA rules change a little bit. You may still be covered by an HSA qualified health plan for you and your family but you are NOT eligible to make HSA contributions.
The year you enroll in Medicare and are covered by an HSA qualified health plan, your HSA contribution limit is prorated for that year. This includes enrolling in Medicare part A.
But, you should always check with the Medicare office to verify your Medicare enrollment status after you turn 65. Sometimes people are automatically enrolled in Medicare when they turn 65.
If you're covered by an HSA qualified health plan and eligible for Medicare but DO NOT enroll in Medicare, then you may still be eligible to make HSA contributions.
Remember, once you contribute to your HSA, your HSA funds will still be available for you to use even if you’re on Medicare and ineligible to make additional contributions.
Now, once you've turned 65, HSA rules relax a little...
If you're not enrolled in Medicare and meet the other HSA eligibility requirements you may continue to contribute to your HSA and, use your HSA funds for qualified medical expenses with no taxes or penalty.
If you withdraw HSA funds for items other than qualified medical, dental and vision expenses you wont have to pay a penalty, but you will have to claim the funds as taxable income for that year.
You may use HSA funds for your health insurance premiums, including Medicare premiums, except for Medicare Supplemental premiums. If your spouse is also over 65 you may pay their medical insurance premiums too.
If you retire, no problem – retiring has no effect on your HSA contributions or use of funds. The same contribution eligibility rules apply, as well as the rules for use of funds and contribution limits.
If you have any questions, visit thehsaauthority.com.
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