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.
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