Skip to main content

Beware the Interplay Between HSAs and Medicare

Are you still working, contributing to your health savings account (HSA), and turning 65 this year?

Are you still working, contributing to your health savings account (HSA), and turning 65 this year?

If you fit this profile, you need to be aware of the interplay between HSAs and Medicare, said Jae Oh, the author of Maximize Your Medicare.

What workers need to understand is that they cannot be covered by Medicare and simultaneously contribute to an HSA, said Oh.

You can contribute on a pro-rata basis to your HSA up to the month you’re enrolled in Medicare. And if you contribute more than that there’s a penalty to be paid.

A simple example: Let’s say you’re turning 65 in July 2021, you’re single, and you’re contributing to your HSA. In 2021, if you weren’t turning 65 this year, then you could contribute $3,600 plus an additional $1,000. But since you’re turning 65, the maximum you can contribute to your HSA is $2,300.

So, those who contribute a certain amount to their HSA each pay period need to be careful they don’t contribute more than allowed.

What are some good financial planning tips if you fit this profile?

Defray as best you can your health care expenses until after you enroll in Medicare. And two, consider using your HSA to pay for Medicare Part B premiums.

More on Retirement Daily

Four Ways to Improve Your Financial Wellness in 2021

10 Must-Know Ages During the Retirement Planning Opportunity Zone

Three Ways Generate More Retirement Income From Your Portfolio

Ask the Hammer: Are There Two Five-Year Rules For Roth IRA Contributions and Conversions?

Ask Bob: Is it Too Late for Me to Convert My IRA into a Roth IRA?

New Year’s Resolution – Develop a Plan Based on Expert Advice

Money-saving Tips for First-time Homebuyers

The ABCs of Pass-Through Securities: MLPs

How to Create a Cash Flow Strategy for Retirement

Retirement Daily Learning Center: Ten Keys to More Effective Philanthropy

Using Home Equity To Solve Retirement Challenges

Millennials Need a Long-Term Retirement Plan

Ask the Hammer: Should I Withdraw the Money in My IRA Because of Future Tax Increases?

Ask the Hammer: Should I Invest in Bitcoin?

Ask Bob: Can I Roll a 401(k) to a Roth IRA?

Ask Bob: Will a Roth Conversion Increase My Medicare Premium?