Although you can't make any more contributions to your HSA once you're enrolled in Medicare, your HSA will continue to provide tax-free funds to cover medical costs until you use up all the money in your account. You also have the option to use your HSA funds as a regular retirement account after you turn 65.
What happens to my HSA contributions when I enroll in Medicare?
Hi Karen, when you enroll in Medicare Part A, you will be penalized for continuing to contribute to an HSA. Your Part A will take effect back to the date you qualified for Medicare (usually the month of your 65th birthday). So, you’ll want to plan your HSA contributions accordingly. You might have to contribute less for the year. 0 Reply
Should I sign up for part a If I have an HSA?
The main reason not to sign up for Part A when you’re still covered by a group health plan is if you’d like to continue funding an HSA, since you can’t do so once enrolled. HSAs offer immediate tax savings, since contributions exclude a portion of your income from taxation the year they’re made.
What happens to my HSA if I Lose my health insurance?
If you lose your high deductible health plan (HDHP) health insurance coverage, you won’t be able to contribute to your HSA until you regain HDHP coverage. 2 This is true even if you get health insurance coverage from a different type of health plan.
Can I still get employer HSA contributions if I enroll in Medicare Part A?
No. Once you enroll in Medicare Part A and/or B, you can no longer setup or contribute pre-tax dollars to an existing HSA. This is because to contribute pre-tax dollars to an HSA you cannot have any health insurance other than a HDHP.
Do I lose my HSA when I go on Medicare?
Can I continue to contribute to my HSA once I'm enrolled in Medicare? No. You lose HSA eligibility once you enroll in Medicare, so you can't make additional contributions. You can contribute for months that you were eligible before you enrolled in Medicare.
What happens to my HSA when I turn 65?
At age 65, you can take penalty-free distributions from the HSA for any reason. However, in order to be both tax-free and penalty-free the distribution must be for a qualified medical expense. Withdrawals made for other purposes will be subject to ordinary income taxes.
What is the penalty for having an HSA and Medicare?
If you continue to contribute, or your Medicare coverage becomes retroactive, you may have to pay a 6% excise tax on those excess contributions. If you happen to have excess contributions, you can withdraw some or all to avoid paying the excise tax.
Can you have an HSA account while on Medicare?
HSA contributions (including employer-provided ones) are disallowed when other coverage is in place, including Medicare Part A. Workers can still enroll in HSA-eligible plans and use funds already in HSAs for eligible expenses; they just can't contribute further once enrolled in Medicare.
Can I pay Medicare Part B with my HSA?
After you turn 65, you can use HSA money tax-free to pay premiums for Medicare parts B and D and Medicare Advantage plans (but not premiums for Medicare supplement policies), in addition to paying for other out-of-pocket medical expenses.
Do you have to pay taxes on HSA after 65?
At age 65, you can withdraw your HSA funds for non-qualified expenses at any time although they are subject to regular income tax. You can avoid paying taxes by continuing to use the funds for qualified medical expenses.
When must I stop contributing to my HSA?
Under IRS rules, that leaves you liable to pay six months' of tax penalties on your HSA. To avoid the penalties, you need to stop contributing to your account six months before you apply for Social Security retirement benefits.
When can you no longer contribute to an HSA?
Yes, you can contribute to your HSA as long as you are an eligible individual and have not enrolled in Medicare Part A, B, or D. Once you enroll in Medicare you may no longer contribute to your HSA. For example, if you enroll in Medicare on July 21, you are no longer eligible to contribute to an HSA as of July 1.
Why do I have to stop HSA contributions 6 months before Medicare?
If you have to (or choose to) enroll in Medicare Part A, the coverage is retroactive for up to 6 months, but no earlier than your eligibility date. Because of this, you should plan to stop HSA contributions around 6 months before enrolling in Medicare.
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