Can I pay Medicare premiums with my HSA?
Many employers offer employees a Health Savings Account (HSA) as part of their health benefits. HSAs are financial accounts made available to employees, so they may contribute funds without paying any taxes on them. All funds that are put into an HSA must be used for qualified medical expenses. If the funds are used for any other purpose, the money will be taxed.
Once you apply for Medicare, you may no longer receive new HSA deposits from your employer. However, you may still use your existing HSA funds to pay for qualified medical expenses, including some Medicare costs. Contributing to an HSA before you enroll in Medicare is one way to help prepare for future medical expenses and Medicare’s out-of-pocket costs.
Can an HSA be used to pay for Medicare premiums?
Yes. You can use your HSA funds to pay for qualified medical expenses, which include:
- Medicare Part B, C, and D premiums
- Medicare copayments and deductibles
- Out-of-pocket medical expenses
- Dental, vision, and hearing expenses
- Over-the-counter medications
However, an HSA cannot be used to pay for Medicare Supplement (Medigap) plan premiums.
Can an HSA be used to pay for Medicare Part B premiums?
Yes. You can use your HSA funds to pay for your Part B premium.
Can an HSA be used to pay for Medicare Advantage plan premiums?
Yes. You can use your HSA funds to pay for Medicare Advantage (Part C) plan premiums, as well as copays and coinsurance.
Can an HSA be used to pay for Medicare Part D premiums?
Yes. You can use your HSA funds to pay for Part D (prescription drug plans) premiums.
Can an HSA be used to pay for Medicare Supplement (Medigap) plan premiums?
No. Supplement plan premiums are NOT considered a qualified medical expense.
Can my past Medicare premiums be reimbursed?
Yes. You can withdraw money from your HSA to reimburse yourself for Medicare premiums that are automatically deducted from your Social Security benefits check.
You can withdraw HSA funds at any time to reimburse yourself for eligible expenses you have incurred since you opened the HSA. So if you didn’t realize you could withdraw HSA money to pay for Medicare premiums, you could reimburse yourself for all those premiums at any time. You just need to keep the receipts that show you paid for those eligible expenses.
HSA Contributions and Medicare
Can I contribute to my HSA if I have Medicare?
No. If you have an HSA through your employer, it is important to know that you may no longer contribute to your HSA once you enroll in any part of Medicare. When you enroll in Medicare, you can use your existing HSA funds to pay for health care costs. Even though you can’t deposit new funds, you can access all the money in your HSA tax-free, so long as you use it for qualified medical expenses.
When should I stop my HSA contributions?
If you currently have an HSA through your employer, it’s important to know that you may no longer contribute to your HSA once you enroll in any part of Medicare. If you decide to work past age 65 and delay your Medicare coverage, this rule applies at that point. You must stop contributing to your HSA up to six months before you sign up for Medicare Part A or you could be subject to a tax penalty.
Can I contribute to my HSA if I am Medicare eligible, but choose not to enroll in Medicare?
It depends on when you apply for Medicare. If you take Medicare at age 65, you'll need to stop your HSA contributions by the age of 65. If you decide to work beyond age 65 and take Medicare later, you will need to turn off those contributions six months prior to applying for Medicare. Call our advisors at RetireMed and we can discuss your personal situation.
Can I contribute to an HSA if my spouse is covered by Medicare, but I am not?
Your eligibility to contribute to an HSA account is determined individually depending on the employee’s Medicare enrollment status. Your spouse being on Medicare has no bearing on your ability to contribute to an HSA.
What if I contributed to my HSA when I was not eligible because I had Medicare coverage?
You could face tax penalties. If you did not stop contributing to your HSA within the appropriate time frame, contact your tax advisor for guidance.
Have questions about your Health Savings Account?
If you’d like clarification on how to handle your health savings account as you approach Medicare enrollment or after you enroll, our local advisors in Cincinnati and Dayton are standing by to help. Simply call 866.939.8436.
Are you a RetireMed client? You can reach out to your client advisors by sending an email to client@retiremed.com or by calling 877.222.1942.