Using Health Savings Account Funds When You Enroll in Medicare TopicsPopular TopicsMost Recent Medicare Working Past 65 Lifestyle & Wellness Considering Retirement Existing Clients If you are currently on employer health coverage, you may have a health savings account (HSA) as part of your health care benefits. But how are your HSA funds impacted when you enroll in Medicare? It all depends on when you enroll, what your employer health coverage looks like, and how soon you plan to retire. While You’re Still Working A health savings account (HSA) is a financial account available to employees for health care costs. You do not pay taxes on HSA deposits. You can also withdraw money from this account tax-free, as long as it is used for covered medical expenses. Both you and your employer contribute funds to your HSA. HSAs have annual contribution limits which vary from plan to plan. Keep a close eye on your HSA contributions, especially as you near Medicare eligibility. Decide when you plan to retire and when you plan to enroll in Medicare; those may not be the same date. Make a clear plan with your employer about when exactly you plan to enroll in Medicare. Not only will this smoothen your transition from employer coverage to Medicare—it will also help you avoid potential penalties. Both you and your employer must take actions regarding your HSA. When You’re Planning to Enroll in Medicare If you plan to enroll in Medicare within the year, you can pro-rate your HSA contributions. This helps you better plan and be sure you don’t exceed your contribution limit. Your employer must stop contributing HSA funds once you sign up for Medicare, as well, even if you plan to continue working. In many cases, individuals choose to forego their employer health coverage and continue to work while on Medicare. You can enroll in Medicare coverage without retiring from your job. If you are working and eligible for Medicare, when you eventually enroll, Medicare will then provide six months of retroactive coverage. For example, if you qualify for Medicare now but wait to enroll until October 2021, Medicare will assist with covered health care expenses dating back to April. But because you are retroactively “enrolled” in Medicare for an extra six months, this could lead to penalties if you were contributing to your HSA during that time. To avoid this, you must stop depositing HSA funds to your account six months in advance. After You Enroll in Medicare Once you enroll in Medicare, you can no longer contribute new funds to an HSA through your employer. However, you can use your existing HSA funds to pay for Medicare costs. As long as you withdraw from your health savings account to cover approved medical expenses, your money is not taxed. This applies to deductibles, premiums, copays, and coinsurance on your Medicare plan. You can also continue to work while on Medicare, as long as you aren’t insured by your employer health coverage. Questions About Your Health Savings Account? RetireMEDiQ offers guidance on all your Medicare questions: how to use your HSA funds in retirement, when to enroll in Medicare, and how to find the right plan for your needs. To speak with a member of our advisor team, reach out to us by emailing email@example.com, calling 1-866-407-5180, or scheduling a call. Already a RetireMEDiQ client? Reach out to your client advisor for guidance on your health plan. Call 1-877-222-1942 or email firstname.lastname@example.org. Stay informed about Medicare An easy way to stay updated on Medicare and any important changes is to sign up for the free, customizable RetireMEDiQ newsletter. Based on your personal preferences and interests, helpful articles and community-related content will be sent directly to your inbox. Sign up for our newsletter Yes! Tell me more about Medicare and help me explore my options.Name First Email* Date of BirthMonth123456789101112Day12345678910111213141516171819202122232425262728293031Year202120202019201820172016201520142013201220112010200920082007200620052004200320022001200019991998199719961995199419931992199119901989198819871986198519841983198219811980197919781977197619751974197319721971197019691968196719661965196419631962196119601959195819571956195519541953195219511950194919481947194619451944194319421941194019391938193719361935193419331932193119301929192819271926192519241923192219211920Phone*By entering your information, you are authorizing RetireMEDiQ to communicate with you directly regarding Medicare news and health care coverage.vidhiddenNameThis field is for validation purposes and should be left unchanged.