Can You Make HSA Contributions After Age 65?
Understand HSA eligibility after age 65. Learn how Medicare impacts your ability to contribute and navigate complex scenarios for healthcare savings.
Health Savings Accounts (HSAs) serve as tax-advantaged savings vehicles designed to help individuals cover qualified healthcare expenses. These accounts offer a unique combination of tax benefits, including tax-deductible contributions, tax-free growth, and tax-free withdrawals for eligible medical costs. As individuals approach or pass age 65, a common inquiry arises regarding their continued ability to contribute to these beneficial accounts. This article clarifies the conditions for contributions and the implications of various healthcare coverage scenarios after age 65.
Foundational HSA Eligibility Requirements
Eligibility to contribute to a Health Savings Account requires meeting specific criteria established by the IRS. A primary requirement is enrollment in a High Deductible Health Plan (HDHP). For 2025, an HDHP for self-only coverage must have an annual deductible of at least $1,650 and an out-of-pocket maximum not exceeding $8,300. For family coverage, the minimum annual deductible is $3,300, with an out-of-pocket maximum of $16,600.
An individual must not have other disqualifying health coverage. This includes general-purpose Flexible Spending Accounts (FSAs) or Health Reimbursement Arrangements (HRAs), or other non-HDHP insurance that pays benefits before the HDHP deductible is met. Certain types of coverage, such as specific disease or accident insurance, do not disqualify an individual. An individual also cannot be claimed as a dependent on someone else’s tax return.
Annual contribution limits are set by the IRS, varying based on the type of HDHP coverage. For 2025, the maximum contribution for self-only coverage is $4,300, and for family coverage, it is $8,550. Individuals aged 55 and older can make an additional “catch-up” contribution of $1,000 annually. This additional contribution helps older individuals save more for potential healthcare costs.
Medicare’s Effect on HSA Contributions
Enrollment in Medicare significantly impacts an individual’s eligibility to contribute to an HSA. Once an individual enrolls in any part of Medicare, including Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), or Part D (prescription drug coverage), they are no longer eligible to make new HSA contributions.
Eligibility to contribute to an HSA ends on the first day of the month Medicare coverage begins. This is because Medicare is considered “other health coverage” that is not an HDHP, which violates a fundamental rule for HSA eligibility.
For individuals who enroll in Medicare partway through the year, HSA contributions must be pro-rated. Contributions are limited to the portion of the year during which the individual was not enrolled in Medicare and was otherwise HSA-eligible. For example, if Medicare coverage starts on July 1st, contributions can only be made for the months of January through June.
Navigating Specific Scenarios After Age 65
Individuals over age 65 who remain actively employed and are covered by an HDHP through their employer may continue to make HSA contributions. This is permissible as long as they do not enroll in Medicare or have other disqualifying health coverage.
A key consideration for those delaying Medicare is the potential for retroactive Part A coverage. If an individual postpones Medicare Part A enrollment past age 65 but then enrolls, Part A coverage can be backdated for up to six months. This retroactivity means any HSA contributions made during that six-month look-back period become ineligible. To avoid this, stop HSA contributions at least six months prior to applying for Medicare or Social Security benefits, which automatically trigger Part A enrollment.
TRICARE generally disqualifies an individual from contributing to an HSA. For Veterans Affairs (VA) medical benefits, an individual may remain HSA-eligible if they are eligible for VA benefits but have not received medical services from the VA within the preceding three months. An exception exists for VA services related to a service-connected disability, which do not restrict HSA contributions.
In situations involving married couples where one spouse is on Medicare and the other is not, the non-Medicare spouse can continue to contribute to an HSA if they maintain an HDHP and meet all other eligibility requirements. The HSA eligibility rules apply individually, not to the household as a whole.
Addressing Ineligible Contributions
Making contributions to an HSA when an individual is not eligible, or exceeding the annual limits, results in excess contributions. This can occur if contributions continue after Medicare enrollment begins or during a period of retroactive Medicare coverage.
The consequence of an excess contribution is a 6% excise tax, applied to the excess amount for each year it remains in the account. Additionally, any earnings attributable to the excess contributions are subject to income tax.
To correct an excess contribution, the excess amount, along with any net income attributable to it, should be withdrawn from the HSA by the tax filing deadline for the year the excess contribution was made, including any extensions. If corrected by this deadline, the excise tax can be avoided. Individuals must file IRS Form 5329 with their tax return for reporting excess contributions.