What Can You Do with an HSA After 65?

After reaching the age of 65, many individuals wonder about the options available to them regarding their Health Savings Account (HSA). An HSA can provide significant benefits even after retirement, offering a range of possibilities to utilize the funds saved over the years. Here is a comprehensive guide on what you can do with an HSA after turning 65:

1. Medical Expenses

Even after turning 65, you can continue to use your HSA funds tax-free for qualified medical expenses, including premiums for Medicare Parts A, B, D, and Medicare Advantage plans. This feature makes HSAs a valuable asset in covering healthcare costs during retirement.

2. Long-Term Care Premiums

If you have long-term care insurance, you can use your HSA funds to pay for the premiums tax-free. This can be a significant help in managing expenses related to long-term care services.

3. Non-Medical Expenses

While HSA funds are intended for medical expenses, after the age of 65, you can still withdraw funds for non-medical expenses. However, these withdrawals will be subject to income tax (similar to a Traditional IRA).

4. Supplementing Retirement Income

After the age of 65, you can withdraw funds from your HSA for any reason without penalty. While these withdrawals will be taxed as ordinary income if not used for qualified medical expenses, an HSA can serve as an additional source of retirement income.

5. Estate Planning

HSAs can be passed on to a named beneficiary after your death. If your spouse is the beneficiary, the HSA will be treated as their own. If a non-spouse beneficiary inherits the HSA, the account will no longer be an HSA, but the fair market value as of the date of death will be taxable income to the beneficiary.

Overall, an HSA remains a valuable financial tool even after the age of 65, offering flexibility and tax advantages in managing healthcare costs and retirement savings.

Once you hit 65, your Health Savings Account (HSA) still holds the key to managing healthcare costs effectively. You can use these funds without incurring any taxes for qualified medical expenses, which makes HSAs a powerful companion in your retirement planning journey.