Health Savings Accounts (HSAs) offer a valuable way to save for medical expenses on a tax-advantaged basis. However, if you’re approaching age 65 and considering Medicare, it’s crucial to understand how enrollment—especially in Medicare Part A—impacts your ability to contribute to an HSA. This article explains everything you need to know about HSA contributions allowed with Medicare Part A, including eligibility, contribution limits, and common pitfalls.
Can You Contribute to an HSA if You Have Medicare Part A?
No, you cannot contribute to an HSA once you’re enrolled in Medicare Part A. One of the primary eligibility requirements for HSA contributions is being enrolled in a High Deductible Health Plan (HDHP) and not being enrolled in any part of Medicare. Medicare Part A is considered health insurance coverage, which disqualifies you from making further HSA contributions.
If you contribute to an HSA after your Medicare Part A coverage has started, those contributions may be subject to IRS penalties and must be withdrawn.
Why You Must Stop HSA Contributions 6 Months Before Enrolling in Medicare
A little-known rule often catches retirees off guard: when you apply for Medicare after age 65, your Part A coverage is retroactive for up to six months (but not earlier than your 65th birthday). That means you’re technically considered enrolled in Medicare Part A six months before your actual enrollment date.
To avoid excess contributions and tax penalties, you must stop contributing to your HSA at least six months before the date you apply for Medicare.
Example:
If you apply for Medicare on July 1st, and you’re over 65, your Part A coverage could be retroactive to January 1st. You would need to stop making HSA contributions by the end of December of the previous year to remain compliant.
What Disqualifies You from Contributing to an HSA?
Several factors can disqualify you from contributing to an HSA:
- Enrollment in Medicare Part A, B, or D
- Enrollment in non-HDHP health insurance
- Being claimed as a dependent on someone else’s tax return
- Using VA medical benefits within the last 3 months (in most cases)
Do I Have to Stop HSA Contributions When I Turn 65?
Turning 65 does not automatically disqualify you from contributing to an HSA. However, the moment you enroll in Medicare, including Part A (even if it’s premium-free), you are no longer eligible to contribute to your HSA.
If you delay Medicare enrollment and continue your HDHP coverage (e.g., through an employer plan), you may continue to contribute to your HSA until you enroll in Medicare.
Final Thoughts: Planning Ahead Is Key
Understanding the interaction between HSA contributions and Medicare Part A is critical for avoiding IRS penalties and maximizing your tax-advantaged savings. If you’re nearing Medicare eligibility, speak with your benefits advisor or tax professional to determine the right time to stop HSA contributions. Proper planning ensures compliance and allows you to make the most of your healthcare savings.
