Can I Contribute to an HSA After Age 65?
Unpack the nuances of HSA eligibility and the strategic use of your health savings account once you turn 65.
A Health Savings Account (HSA) serves as a savings tool designed to help individuals manage healthcare costs. It is a tax-advantaged account that allows for savings specifically allocated for medical expenses. HSAs offer notable tax benefits, including tax-deductible contributions, tax-free growth on invested funds, and tax-free withdrawals when used for qualified medical expenses.
Understanding HSA Contribution Eligibility
To contribute to a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP) and not have any other disqualifying health coverage. An HDHP has a higher annual deductible than traditional plans. For 2025, an HDHP must have a minimum annual deductible of $1,650 for self-only coverage or $3,300 for family coverage. Annual out-of-pocket expenses, including deductibles and co-payments but not premiums, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage in 2025.
Beyond the HDHP requirement, individuals cannot have other health coverage that is not a permitted type, or be claimed as a dependent on someone else’s tax return. Enrollment in Medicare, TRICARE, or a general-purpose Flexible Spending Account (FSA) also disqualifies an individual from making HSA contributions.
How Medicare Affects HSA Contributions
Once an individual enrolls in any part of Medicare, they are no longer eligible to make new contributions to a Health Savings Account. This rule applies regardless of whether it’s Medicare Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), or Part D (prescription drug coverage).
A common scenario that impacts HSA eligibility is signing up for Social Security benefits. When an individual begins receiving Social Security retirement benefits, they are often automatically enrolled in Medicare Part A. This automatic enrollment can have a retroactive effective date, potentially going back up to six months prior to applying for Social Security or Medicare, but not earlier than the individual’s 65th birthday. If contributions were made to an HSA during this retroactive period, those amounts are considered excess contributions. Any excess contributions must be withdrawn by the federal tax return filing deadline, including extensions, for the contribution year.
Accessing and Using HSA Funds After 65
Even after an individual is no longer eligible to contribute to an HSA due to Medicare enrollment, the accumulated funds remain accessible. The funds can still be used tax-free for qualified medical expenses. This allows individuals to pay for deductibles, copayments, and other out-of-pocket costs not covered by Medicare.
A flexibility for HSA holders after age 65 pertains to withdrawals for non-medical expenses. While withdrawals for non-qualified expenses before age 65 are subject to both ordinary income tax and a 20% penalty, this penalty is waived once the account holder reaches age 65. Withdrawals for non-medical purposes after age 65 will still be subject to ordinary income tax, similar to withdrawals from a traditional Individual Retirement Account (IRA). Qualified medical expenses payable tax-free from an HSA include a broad range of services, such as doctor visits, prescriptions, dental care, vision care, and certain Medicare premiums (Parts A, B, and D).