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What do I need to know about my HSA and being enrolled in Medicare Part A?
• If you’re entitled to Medicare because you signed up for Part A at age 65 or later (perhaps not realizing that it can aect
the use of your HSA)
but have not yet applied for Social Security retirement benets
, you can withdraw your application
for Part A. (To do so, contact the Social Security Administration at 800.772.1213.) There are no penalties or repercussions
and you are free to reapply for Part A at any future date.
•
If you have applied for or are receiving Social Security benets
, which automatically entitle you to Part A, you cannot
continue to contribute to your HSA. The only way you could opt out of Part A is to pay back to the government all the
money you’ve received in Social Security payments, plus everything Medicare has spent on your medical claims. You
must repay these amounts before your application to drop out of Part A can be processed. If you take this action, you’re
no longer entitled to Social Security or Medicare, but you can reapply for both at any time in the future (for example, if
you end or lose your HSA coverage).
I will be eligible for Medicare this year but do not plan to enroll until I retire. I will remain on my
employer’s insurance plan until that time. Can I keep contributing to my HSA?
Yes. If you are eligible for Medicare but do not actually enroll, you can continue to contribute to your HSA. Once you enroll
in any part of Medicare, you will no longer be eligible to contribute to your HSA. Even enrolling in Part A alone will disqualify
you from depositing to your HSA.
What if I am covered under my spouse’s HSA at work?
The IRS rule aects only employees age 65 or older who have HSAs through their employment, because they are the ones
who contribute to HSAs from their before-tax earnings at work. The rule does not aect covered spouses over age 65, who
can continue to use funds from the working spouse’s HSA for approved medical purposes.
What if I received Medicare Part A under age 65 through disability?
In this situation, you’re entitled to Medicare as soon as you’ve received your 25th disability check from Social Security.
In other words, you automatically go into the Medicare system and are no longer eligible to contribute to your HSA. If
you’re able to return to work, your disability payments will eventually stop, but your Medicare entitlement continues for up
to 93 months from the time you rst applied for disability.
What are the consequences of contributing funds to my HSA while enrolled in Medicare?
Medicare beneciaries who continue to contribute funds to a HSA may face IRS penalties including payment of back taxes
on their tax-free contributions and account interest, excise taxes and additional income taxes.
What if I need more information?
If you have any questions about this process, we recommend you consult a tax professional.