Medicare and Health Savings Accounts (HSAs)
Because knowing when to stop—and how to spend—your HSA can save you tax headaches later.
What an HSA Does
A Health Savings Account (HSA) is a tax-advantaged way to save and pay for healthcare costs.
With an HSA:
- You can contribute pre-tax money year-round.
- Any interest or investment growth is tax-free.
- Withdrawals for qualified medical expenses are also tax-free.
It’s one of the most flexible ways to manage healthcare costs—until Medicare enters the picture.
Once You Enroll in Medicare
After you sign up for any part of Medicare (Part A, B, C, or D), you can’t make new HSA contributions—and neither can your employer.
The good news?
- You can keep using your HSA funds tax-free for qualified medical expenses.
- You can still invest your balance, and your earnings remain tax-free.
- After age 65, you can even use your HSA to pay most Medicare premiums—including Parts A, B, C, and D—though not Medigap premiums.
These withdrawals are tax-free as long as they’re for eligible healthcare costs.
If You Have Employer Coverage with an HSA
If you’re still working and have employer-sponsored insurance with an HSA:
If your employer has 20 or more employees:
- You can delay Medicare enrollment without penalty until you retire.
- You can keep contributing to your HSA as long as your employer coverage stays active and creditable (meaning it’s as good as or better than Medicare).
- You won’t face late-enrollment penalties if:
- Your employer coverage is creditable for Part D, and
- You enroll in Medicare within 8 months of losing your employer coverage.
If your employer has fewer than 20 employees:
- Once you turn 65, you’ll need to enroll in Medicare and stop contributing to your HSA.
- Your employer coverage will then pay second to Medicare.
If You’re Receiving Social Security
If you start collecting Social Security while still working, you’ll be automatically enrolled in Medicare Part A.
That means you must stop contributing to your HSA as soon as your Part A coverage starts—even if you’re still working and covered by an HSA-eligible plan.
If You Sign Up for Medicare Late
Medicare Part A can begin retroactively up to six months (but never earlier than the month you turn 65).
That means you should stop making HSA contributions once your retroactive Medicare coverage would begin—or you may owe taxes and penalties on any contributions made during that time.
Pro Tip
To avoid accidental tax penalties, stop contributing to your HSA six months before you’re planning to enroll in Medicare—or before your retroactive Part A coverage would begin.
Keep Exploring
Still working or covered under an employer plan? Learn how Medicare and job-based insurance work together—and when to enroll if you’re planning to keep working after 65.
👉 Read: Working Past 65? Here’s How It Affects Your Medicare Enrollment
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We work with multiple Medicare plan carriers including:
- Aetna Inc.
- Devoted Health, Inc.
- Humana Inc.
- Mutual of Omaha Insurance Company
Enrollment in a plan may be limited to certain times of the year unless you qualify for a Special Enrollment Period or you are in your Medicare Initial Enrollment Period. Enrollment depends on plan’s contract renewal with Medicare.
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Medicare Advantage and Part D plans are insured by a Medicare Advantage HMO, PPO and PFFS organization with a Medicare contract and/or a Medicare-approved Part D sponsor. Enrollment depends on plan’s contract renewal with Medicare.
We do not offer every plan available in your area. Currently we represent 4 organizations which offer 1056 products in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.
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Estimated annual costs are based on the usage you provided + yearly premiums. Medicare Advantage and Medicare Supplement plan calculations include the standard Part B premium + any Part B premium reductions. Actual annual costs depend on your usage, along with your Part B premium and the date you enroll.
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