Blog Information

• Posted By : Daniel Stewart
• Posted On : Aug 09, 2022
• Views : 125
• Category : General
• Description : A health savings account (HSA) is one of the wisest ways to save for unexpected medical expenses. You can spend decades contributing to an HSA and generating interest to help it grow. But what happens when you go on Medicare?

Overview

• A health savings account (HSA) is one of the wisest ways to save for unexpected medical expenses. You can spend decades contributing to an HSA and generating interest to help it grow. But what happens when you go on Medicare?
  
  

  There are strict rules regarding contributing to an HSA and Medicare. Understanding those rules will help you manage your money and avoid potential fines.
  
  

  HSA and Medicare Eligibility
  
  

  Qualifying for an HSA is easy. You must be enrolled in an HSA-qualified high-deductible health plan (HDHP). You can't be someone else's dependant or covered by any other insurance. If you would like to know the difference between HSA and medicare, visit this website.
  
  

  Once enrolled, you can contribute up to the annual limit every year. For 2022, the yearly limit for an individual is $3,650 and $7,000 for families. You're free to contribute to the HSA and use its funds to pay for qualified medical expenses tax-free throughout your life.
  
  

  To qualify for Medicare, you must be at least 65 years old. Those with disabilities and certain conditions can be eligible as well.
  
  

  HSA Contributions While on Medicare
  
  

  Once you are enrolled in Medicare, you can no longer contribute to your HSA. Those are IRS rules. Most financial advisors recommend ceasing HSA contributions a full six months before enrolling in Medicare. Doing so will help you avoid tax penalties.
  
  

  Medicare is optional, so you can delay enrollment to continue contributions. However, it's important to remember that receiving Social Security benefits entitles you to Part A Medicare. As a result, you'd have to stop contributions if you're over 65 and receiving Social Security.
  
  

  What Happens to HSA Funds?
  
  

  Don't worry! Your HSA account is still safe and accessible. The IRS rules about Medicare only apply to contributions. You can still use your HSA funds. However, you cannot add more. The money is still there and accessible whenever you need it.
  
  

  Having your HSA available is beneficial. It helps cover deductibles, copayments, premiums, and more. While you could withdraw your money and pay the tax penalty, it pays to have that safety net despite the inability to continue contributing.
  
  

  Read a similar article about HSA and PPO comparison here at this page.