HSA and Medicare Premiums – How to Best Use Your HSA After Age 65

Once you enroll in Medicare, you can no longer contribute to your Health Savings Account anymore but you can still use it tax-free for the rest of your life. In fact, since medical expenses are one of the largest expenses a typical retiree will face, HSAs are one of the most important retirement planning accounts.

We usually advise our clients to build up HSA balances when preparing for retirement. But there is some fine print to know and analysis required to find the best way to use an HSA once you are in retirement and on Medicare.

Using a Health Savings Account for Medicare Premiums

HSAs can be used to pay for the premiums for Medicare part A, if you have to pay out of pocket, Part B, and Part D . If these premiums are deducted from your Social Security retirement benefits payment, you can reimburse yourself from your HSA.

Note that most retirees have premium-free Medicare part A because of their, or their spouse’s, work history.

HSAs can also be used for Medicare Advantage plan premiums, dental and vision expenses, some amount of long term care premiums, copays and out of pocket expenses to meet your deductibles.

What Medicare Expenses HSAs Can Not Be Used For

Now for some fine print on HSAs and Medicare: HSAs cannot be used for Medigap insurance premiums. This might be your Plan F, G, or N premiums for example.

Also, if the owner of the HSA is under age 65, but their spouse is over age 65, the HSA can not be used to cover the spouse’s Medicare premiums.

Finally retirees need to decide when is the best time to tap their HSA. Should you tap it early to keep income low early in retirement? This may be best for those doing Roth conversions , or needed ACA health insurance credits. Or should you wait and let the account grow and compound longer?

This may be a better option for those who have ample after-tax resources to spend down. If you’re nearing Medicare and wondering how your HSA fits into the picture, now’s the time to build a plan. Reach out if you’d like help making the most of your HSA in retirement.

 

FAQs About Medicare Coverage and Health Savings Accounts

1. Can I use my HSA to pay for Medicare premiums?

Yes, you can use your Health Savings Account (HSA) to pay for certain Medicare premiums tax-free. You can use your HSA funds to pay for premiums for Medicare Part B (Medical Insurance), Medicare Part D (prescription drug plans), and Medicare Advantage plans (Part C). However, premiums for Medicare Supplement (Medigap) plans are not considered qualified medical expenses for HSA purposes and cannot be paid with HSA funds tax-free

2. How to link my HSA account with Medicare billing?

Many retirees pay their Medicare premiums directly from their Social Security benefits. If this is the case, you will reimburse yourself from your HSA for the withheld premiums.

If you are not yet on Social Security, go to www.medicare.gov and either create a secure Medicare account or log in to your existing account. Once logged in, find the option “Pay my premium.” This option allows you to pay your Medicare premiums online using several payment methods, including an HSA debit card. When prompted, select the Health Savings Account (HSA) debit card as your payment method. You can also choose a regular credit/debit card or checking/savings account if preferred.

3. Can I continue contributing to an HSA after enrolling in Medicare?

No, once you are enrolled in Medicare coverage you can no longer contribute to an HSA. This is true even if you enroll in the high-deductible health plan options available with several Medicare supplement plans.