Home Resources Tips of the Week AMAC’s Tip of the Week: What No One Tells You About Keeping Your HSA When You Retire

AMAC’s Tip of the Week: What No One Tells You About Keeping Your HSA When You Retire


A Health Savings Account (HSA) is a great way to pay for your health expenses. But did you know there are certain rules that apply to HSAs when going on Medicare? Watch to learn more about retirement and your HSA.

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If you were able to prepare for retirement, you may have chosen to contribute to a 401(k), IRA, or HSA during your working years to help you pay for future medical expenses. While an HSA may be one of the more advantageous of the three, you may not know that there are certain rules you must follow once you get ready to go on Medicare.

A Health Savings Account (HSA) is a great tool to help you pay for health expenses with all the added benefits of being extremely tax-advantaged. It’s a personal savings account that you can contribute to and withdraw from tax-free to use for medical expenses like copays, coinsurance, and deductibles.

If you have an HSA, it is important that you and your employer STOP contributing to it at least 6 months before you retire or apply for Social Security benefits (or Railroad Retirement Board benefits). If you fail to do so, you could face a hefty tax penalty if your Medicare coverage was in effect while contributions were made. Once you are covered by Medicare, you can no longer contribute to your HSA – this is because in order to make contributions, you cannot have any health insurance other than a High Deductible Health Plan (HDHP).

Whether you should put off retirement to continue contributing is your choice. Just be sure to plan your retirement date ahead of time so you can stop making contributions 6 months prior to going on Medicare. Remember, you can still use the funds to pay for qualified medical expenses, so it will make a great addition to any coverage you pick up.

(Please note that we do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.)
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