What Happens to the Money in My HSA When I Go on Medicare?

When you go on Medicare, you may wonder what happens to the money in your Health Savings Account (HSA). It's essential to understand how an HSA works with Medicare to make informed decisions about your healthcare savings. Here's what you need to know:

When you enroll in Medicare, whether it's Part A, Part B, or both, you are no longer eligible to contribute to your HSA. However, the money you have already saved in your HSA remains yours to use for qualified medical expenses.

If you withdraw funds from your HSA for non-qualified expenses after enrolling in Medicare but before turning 65, you will incur a tax penalty. However, once you reach 65, you can withdraw funds for non-qualified expenses without penalty, though you will pay regular income tax on the withdrawal.

It's important to note that while you can no longer contribute to your HSA once on Medicare, you can still use the funds in your HSA for Medicare premiums, copayments, deductibles, and other qualified medical expenses.

Key Points:

• Money in your HSA remains available for eligible medical expenses even after enrolling in Medicare.
• You cannot contribute to your HSA once you are on Medicare.
• Withdrawals for non-qualified expenses before age 65 incur a tax penalty.
• After age 65, withdrawals for non-qualified expenses are subject to regular income tax.
• You can use HSA funds for Medicare expenses.

When you transition into Medicare, understanding the status of your Health Savings Account (HSA) is crucial for your financial planning. While you can no longer contribute to your HSA once you enroll in Medicare, it’s essential to know that all the funds in your account are still available for use.