What Happens to HSA Funds When Medicare Starts?

When you have an HSA (Health Savings Account) and you become eligible for Medicare, there are changes that occur with your HSA funds. Understanding what happens to your HSA funds when Medicare starts is important for managing your healthcare finances effectively.

Here's what you need to know:

1. You Can Still Use HSA Funds: Even when you enroll in Medicare, you can continue to use your HSA funds to pay for qualified medical expenses. Medicare coverage does not affect your ability to use the funds in your HSA.

2. You Cannot Contribute to Your HSA: Once you enroll in Medicare, you are no longer allowed to contribute to your HSA. This means that you cannot make any new contributions to the account, including both individual and employer contributions.

3. You Can Use Your HSA Funds for Medicare Premiums: While you cannot use your HSA funds to pay for Medigap premiums, you can use them to cover Medicare Part B, Part D, or Medicare Advantage premiums.

4. Rollover HSA Funds: If you have funds left in your HSA when you enroll in Medicare, you can continue using those funds for qualified medical expenses. There is no time limit on when you must use up the remaining balance.

5. HSA Funds for Long-Term Care: You can also use your HSA funds tax-free to pay for qualified long-term care insurance premiums or expenses.

When you transition to Medicare, understanding your HSA (Health Savings Account) funds is crucial for your financial planning. The good news is that you can still utilize your HSA funds for qualified medical expenses, providing a safety net as you navigate your healthcare journey.