Medicare & HSA

Medicare & HSA

You made it! It may seem surreal that Medicare is finally approaching your doorstep and the discussions around the water cooler about Medicare with your colleagues are not getting you the answers you need. One thing to keep in mind is that Medicare is unique for everyone. Whether you are savvy with Health Savings Accounts (HSA) or not, here are some of our top tips as you are getting ready for Medicare.
Maximizing your contribution

After the age of 55, you can place an extra $1,000 a year into your HSA. If you and your spouse have separate HSAs (and both over the age of 55), you can put away a total of $2,000 above the annual limit. Not only does this help save for future medical costs, but it will also help lower your taxable income for the year.

Using your HSA with Medicare premium costs

Medicare is unique when it comes to HSA distributions for medical expenses. Unlike plans that you buy on MNsure or the open market, you can pay for your Medicare premiums from your HSA. Medicare part B’s premium is withdrawn from your Social Security check and your HSA can be used for reimbursement. That is a $2,096 (in 2024 for standard premium) distribution that you can take tax-free! You can also use HSA for Medicare Advantage plan premiums and Medicare Part D plan premiums. HSAs are a great way to stash away tax-free dollars for future healthcare costs in retirement. 

Medicare A and HSA

Planning to take Medicare after the age of 65 is becoming more and more common. But still many individuals feel that they are needing to give up their HSA contributions for the year that they retire due to Medicare rules.


A of Medicare will become effective six months before the time you have sent your application. (This is true if you are enrolling after the age of 65yrs and 7mos.) It is important to track since A of Medicare disqualifies you from making contributions. (IRS Publication 969) Excess contribution amounts are subject to a tax of 6% until they are withdrawn, and you will also have to pay income taxes on excess as well. It can feel overwhelming, so speaking with your tax professional will help ensure you utilizing the tax code correctly.

Qualified Medical Expenses

Besides using HSA funds to pay for some Medicare premiums, you can continue to use funds to pay for medical expenses. IRS publication 502 shares the extensive lists of services that are reimbursable. After the age of 65, you can also take a distribution from this account and no longer be subject to the penalty of not using it towards a qualified medical expense. (That is a 20% penalty before the age of 65). You are only now subject to pay income taxes on the amount.

HSAs are a great tool to save for future costs with healthcare in retirement. Schatz Benefit Group takes pride in educating its clients on their options. They speak this language every day and have helped hundreds of families in the process. Just know that you do not need to navigate the Medicare maze on your own.