Janell Sluga Medicare & Individual Health Insurance Account Executive View Bio

Lawley Medicare Solutions Learning Center:

Ask Janell!

 

QUESTION: My friend told me that when I turn 65 and have Medicare, I can no longer have an HSA. Is that correct?

 

ANSWER: First, an HSA is defined as a Health Savings Account. This is an account that allows an individual or family to save pre-tax dollars to use for paying qualified medical expenses. HSA’s are managed by a bank, credit union, or insurance company. Individuals in a High Deductible Health Insurance Plan (HDHP) are allowed to establish an HSA.

When you (and sometimes your employer) adds money into this HSA, it is pre-tax. You have NOT paid income tax on the money. This allows you to save money on taxes and save to pay for medical expenses down the road. In 2024, the maximum amount you are allowed to put into your HSA is $4,150 for an individual and $8,300 for a family. If you are over 55 years of age, there is an additional $1,000 you can contribute each year to your HSA.

The money in your HSA is YOUR money, it can’t be taken away from you…and it doesn’t need to be spent by the end of the year. The HSA continues to grow as you add to it and is available to you for medical expenses for the rest of your life – before Medicare, and even once you start Medicare. An HSA offers you an opportunity to save pre-tax dollars to pay for future medical expenses.

The question is whether turning 65 and being eligible for Medicare affects your HSA. Once you are eligible for Medicare AND sign up for Medicare, you can no longer put NEW money into your HSA. So, this is one distinction that’s important to understand for when you are about to turn 65…you can still use your HSA money after you have Medicare insurance, but you cannot contribute to it.

If you are eligible for Medicare insurance, but do NOT sign up for either Medicare A or B, then you CAN continue to contribute to your HSA. Once you enroll in Medicare A or B, you can no longer contribute to your HSA. The money in the HSA is still your money to use at anytime , but you cannot put in any new money once you have Medicare A or B. If you are married, you can still contribute on behalf of your spouse, but only to the individual amount of $4,150. This rule change happens the first of the month that you turn 65.

In planning for Medicare eligibility, you must decide about Medicare insurance and your HSA contribution. Your contribution can continue up until you are 65, but you cannot put in a full-year lump sum that year, it would be a pro-rated amount, month by month, up until your birth month. Then, you will not be allowed to make additional contributions.

So, “What can I use the HSA money to pay for?”
The money from an HSA can be used to pay for many of the medical expenses that you incur. The IRS list of Qualified Medical Expenses is a very extensive list. The IRS complete list can be accessed at http://www.IRS.gov.

Some examples are:

  • Doctor and medical expenses, (i.e. hospital bills, ambulance rides, and blood work)
  • Health insurance premiums, long-term care insurance premiums
  • Hearing aids and batteries
  • Smoking cessation programs
  • Eyeglasses and LASIK eye surgery
  • Weight loss programs, prescription drugs, and medications
  • Nursing home care
  • Guide dog
  • Drug addiction
  • Dental care (including braces, dentures, fillings, and oral surgeries)
  • Chiropractor and acupuncture

If you have a HDHP and the opportunity to have an HSA for yourself and your family, I would strongly encourage you to contribute to it. Talk to your employer and see what the rules are for your situation and an HSA. This could be used for the overall and long-term financial health of you and your family.

 

Read all Inside Medicare articles HERE.

 

LAWLEY HAS A TEAM DEDICATED TO MEDICARE INSURANCE!

Our licensed Medicare & Individual Health Insurance team can help clients understand the details of Medicare insurance plans, assist with choosing the right benefits and coverage, and provide guidance when life events that affect health coverage occur.

For questions, concerns, or to reach Lawley Medicare Solutions, fill out the contact form below or call 716.849.1540.