If I Am on Medicare, Can I Contribute to an HSA?

A Health Savings Account (HSA) offers a tax-advantaged way to save and pay for qualified medical expenses. This account provides a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for eligible healthcare costs are also tax-free. HSAs are designed to empower individuals to manage their healthcare finances. The funds within an HSA roll over from year to year, allowing the account to grow over time and remain accessible even if an individual changes health plans or employment.

HSA Eligibility Basics

To contribute to a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP). For 2025, an HDHP is defined as a health plan with an annual deductible of at least $1,650 for self-only coverage or $3,300 for family coverage. Additionally, the plan’s out-of-pocket maximum, which includes deductibles, co-payments, and coinsurance but not premiums, cannot exceed $8,300 for self-only coverage or $16,600 for family coverage in 2025.

An individual cannot be covered by any other health plan that is not an HDHP, with exceptions for certain types of coverage like vision or dental plans. Eligibility also requires that the individual is not enrolled in Medicare and cannot be claimed as a dependent on someone else’s tax return.

For 2025, eligible individuals with self-only HDHP coverage can contribute up to $4,300 to their HSA, while those with family coverage can contribute up to $8,550. Individuals aged 55 and older are permitted to make an additional “catch-up” contribution of $1,000 annually. These limits encompass contributions made by both the individual and their employer.

Impact of Medicare Enrollment on HSA Contributions

Enrollment in Medicare significantly impacts an individual’s eligibility to contribute to a Health Savings Account. Once an individual enrolls in any part of Medicare, whether it is Part A, Part B, Part C (Medicare Advantage), or Part D, they are no longer eligible to make new contributions to an HSA. Continuing to contribute to an HSA after Medicare enrollment can result in tax penalties.

Medicare Part A has a retroactive enrollment rule. If an individual delays enrolling in Medicare after becoming eligible, their Part A coverage can be made retroactive for up to six months from the date they sign up, but not earlier than the month they turned 65. For instance, if an individual signs up for Medicare at age 66, their Part A coverage might be backdated to when they were 65 and a half, potentially covering a period during which they were still contributing to an HSA. This retroactive application means that HSA contributions should cease up to six months before the planned Medicare enrollment date to avoid penalties.

Individuals receiving Social Security benefits may be automatically enrolled in Medicare Part A when they turn 65. This automatic enrollment would immediately cease their eligibility to contribute to an HSA, even if they intended to delay other parts of Medicare. Careful planning is necessary to align HSA contributions with Medicare enrollment timelines.

Spousal Medicare enrollment generally does not affect an individual’s HSA eligibility if they are not yet on Medicare themselves. If one spouse enrolls in Medicare but the other remains covered by an HDHP and meets all other HSA eligibility criteria, the non-Medicare spouse can continue to contribute to their own HSA. They can even contribute up to the family maximum if they remain on a family HDHP plan.

Managing Your HSA Funds After Medicare Enrollment

Even though new contributions to a Health Savings Account cease upon Medicare enrollment, the funds already accumulated in the HSA remain available for use. Individuals can continue to withdraw money from their existing HSA tax-free to pay for qualified medical expenses. This includes a wide range of healthcare costs, such as deductibles, co-payments, and coinsurance for various medical services.

HSA funds can be used to pay for certain Medicare premiums. Specifically, individuals can use their HSA to cover premiums for Medicare Part B, Part D, and Medicare Advantage (Part C) plans. This offers a significant financial advantage, allowing individuals to use pre-tax savings for ongoing healthcare insurance costs in retirement. However, HSA funds generally cannot be used to pay for Medigap (Medicare Supplement) policy premiums.

Beyond premiums, HSA funds can cover many out-of-pocket medical expenses that Medicare might not fully cover. This includes vision and dental care, prescription medications, and other items considered qualified medical expenses under IRS Publication 502. Funds can also be used for qualified long-term care insurance premiums, subject to certain age-based limits. There is no time limit for withdrawing money from an HSA to reimburse yourself for eligible expenses incurred since opening the account, provided you maintain proper records.