HSAs and Medicare: What You Need to Know

Kate Ashford is a writer and NerdWallet authority on Medicare. She is a certified senior advisor (CSA)® and has more than 20 years of experience writing about personal finance. Previously, she was a freelance writer for both consumer and business publications, and her work has been published by the BBC, Forbes, Money, AARP, LearnVest and Parents, among others. She has a degree from the University of Virginia and a master’s degree in journalism from Northwestern’s Medill School of Journalism. Kate has appeared as a Medicare expert on the PennyWise podcast by Lee Enterprises, and she's been quoted in national publications including Healthline, Real Simple and SingleCare. She is based in New York.

Debra Nuckols
Medicare

Debra Nuckols, a Health Plan Services Consultant at BluePeak Advisors, a Gallagher Benefit Services Inc. division, has been in the managed care industry for 20 years. She specializes in Medicare compliance, corporate compliance, auditing and monitoring, and new-to-Medicare health plan startups. Before becoming a consultant, Debra worked for several national managed care organizations as a Medicare compliance officer, serving as an expert on the matter. In addition to her extensive health plan experience, Debra worked at the Centers for Medicare & Medicaid Services, or CMS, in the Seattle area, where she oversaw national and local Medicare Advantage plans.

At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.

Holly Carey
Assigning Editor | Medicare

Holly Carey joined NerdWallet in 2021 as an editor on the team responsible for expanding content to additional topics within personal finance. She currently leads the Medicare team. Previously, Holly wrote and edited content and developed digital media strategies as a public affairs officer for the U.S. Navy. She is based in Virginia Beach, Virginia.

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Health savings accounts, or HSAs, can be a useful savings tool for people with high-deductible health plans. But once you’ve enrolled in Medicare, you can no longer contribute to an HSA. This can get tricky, so it’s helpful to understand how it works.

HSAs are tax-advantaged accounts that let you save and use pretax money for medical expenses. You can use the money in these accounts to pay for costs like copays and deductibles , eligible health care, dental and vision expenses, over-the-counter medications and prescription drugs.

To save to an HSA , you must have a high-deductible health plan , or HDHP. In 2023, an HDHP is defined by the IRS as a plan with a deductible of at least $1,500 for an individual or $3,000 for a family, with an out-of-pocket expense cap of no more than $7,500 or $15,000, respectively.

Can you have an HSA with Medicare?

Medicare is the federal government’s health coverage for Americans age 65 and older and others living with certain disabilities or chronic conditions.

If you established an HSA before you enrolled in Medicare, you can still use the funds from the account. But in order to save to an HSA, you must be enrolled in an HSA-eligible health plan and you can’t be covered by other insurance, such as Medicare. This means you can’t contribute to an HSA (or establish an account if you don’t have one) once you’re enrolled in Medicare.

There’s a six-month contribution look-back period if you sign up for Medicare after age 65 (although not before the month you turn 65), which means you receive retroactive health coverage and can’t make contributions during that period. To avoid penalties, you should stop saving to your HSA six months before you enroll in Medicare.

Shopping for Medicare plans? We have you covered.

Medicare Advantage is an alternative to traditional Medicare offered by private health insurers. It covers the same benefits as Medicare Part A and Part B.

CMS Star Rating

Average Medicare star rating, weighted by enrollment. Star ratings are determined by the Centers for Medicare & Medicaid Services (CMS).

We will connect you with Medicare companies based on the information you provide. They will help you find a plan that suits your needs. If you prefer to speak to a licensed insurance agent right away, please call the number listed.

CMS Star Rating

Average Medicare star rating, weighted by enrollment. Star ratings are determined by the Centers for Medicare & Medicaid Services (CMS).

We will connect you with Medicare companies based on the information you provide. They will help you find a plan that suits your needs. If you prefer to speak to a licensed insurance agent right away, please call the number listed.

Can an HSA be used for Medicare premiums?

Once you’re enrolled in Medicare and over age 65, HSA savings can be used to pay premiums for Medicare Parts A, B, C and D; they can’t be used for Medicare Supplement Insurance premiums, however.

When you’re 65 and older, you can also use HSA money to pay premiums for employer-sponsored health care. Additionally, being 65 means you can take distributions from your HSA for nonmedical expenses without paying a penalty, although you’ll still pay income taxes on the money. For maximum tax savings, use HSA money for qualified medical costs only.

What are the penalties for using an HSA with Medicare?

There’s no penalty for having an already established HSA when you’re enrolled in Medicare, although you can no longer set up a new HSA. However, if you save to an HSA while you’re enrolled in Medicare, you may be hit with IRS penalties on what are considered “excess contributions,” including a 6% excise tax charge.

This applies to the six-month look-back period for HSA contributions when you sign up for Medicare past age 65. If you’ve delayed signing up for Medicare, Medicare coverage is retroactive for the six months before you enroll, not including any months before your 65th birthday month. If you’ve made HSA contributions during any of the look-back months, including your birthday month, you’ll owe tax penalties.

If you’ve saved to your HSA during look-back months, you can often contact your HSA administrator and reverse overcontributions. It’s best to do this before you file income taxes for that year.

Can you delay Medicare and keep using an HSA?

If you have current health coverage through an employer (or spouse’s employer) with 20 or more employees, you can delay signing up for Medicare Part A and Part B at 65 and continue to contribute to an HSA. However, you’ll also have to delay enrolling in Social Security because receiving Social Security automatically enrolls you in Medicare Part A.

COBRA and retiree health insurance don’t count as current employer coverage, so you shouldn’t delay enrolling in Medicare if you have this kind of health coverage. It’s also smart to talk to your benefits coordinator before choosing to delay Medicare Parts A and B; your employer health plan may require you to enroll in Medicare.

Once you have lost employer coverage or stopped working, you’ll have eight months to enroll in Medicare before you’ll face penalties.

If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).

Compare Medigap plans

You’re following Kate Ashford, CSA®
Visit your My NerdWallet Settings page to see all the writers you're following.

Kate Ashford is a certified senior advisor (CSA)® and personal finance writer at NerdWallet specializing in Medicare and retirement topics. See full bio.

On a similar note.

Download the app

Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

NerdUp by NerdWallet credit card: NerdWallet is not a bank. Bank services provided by Evolve Bank & Trust, member FDIC. The NerdUp by NerdWallet Credit Card is issued by Evolve Bank & Trust pursuant to a license from MasterCard International Inc.

Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

NerdWallet Compare, Inc. NMLS ID# 1617539

California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812

Insurance Services offered through NerdWallet Insurance Services, Inc. (CA resident license no.OK92033) Insurance Licenses

NerdWallet™ | 55 Hawthorne St. - 10th Floor, San Francisco, CA 94105