What Happens with My HSA When I Turn 65?

When you reach the age of 65, there are a few important things to consider regarding your Health Savings Account (HSA). Understanding how your HSA works at this milestone can help you make informed decisions about your healthcare and finances.

Here's what happens with your HSA when you turn 65:

1. No more penalty for non-qualified expenses: Once you are 65 or older, you can withdraw funds from your HSA for any reason without facing the 20% penalty that normally applies to non-qualified expenses.
2. Medicare: At 65, you become eligible for Medicare. You can't contribute to your HSA once you enroll in Medicare, but you can still use the funds in your account for qualified medical expenses tax-free.
3. Retirement: Your HSA can serve as a valuable tool for covering healthcare costs in retirement. You can use the funds for Medicare premiums, long-term care insurance, and other qualified medical expenses.
4. Penalty-free withdrawals: Even if you're not using the funds for medical expenses, after age 65, you can still make penalty-free withdrawals for any reason. However, you will need to pay income tax on the amount withdrawn.

When you turn 65, not only do you reach a new chapter in life, but your Health Savings Account (HSA) also undergoes some key changes that can positively impact your financial planning. Understanding these adjustments empowers you to make smart choices regarding your healthcare expenses.