Question: My friend told me that when I turn 65 and have Medicare, I will no longer be able to have an HSA. It’s correct?
Answer: First, let’s define an HSA, (Health Savings Account) is an account that allows an individual or family to save pre-tax dollars to be used to pay for qualified medical bills. HSAs are supervised or managed by a bank, credit union or insurance company. Individuals on a high deductible health insurance (HDHP) plan can set up an HSA.
When you (and sometimes your employer) add money to this HSA, it’s pre-tax. You have NOT paid income tax on money. This allows you to save money on taxes and save to pay for medical bills along the way. In 2022, the maximum amount you can put into your HSA is $ 3,650 for an individual and $ 7,300 for a family. If you are over 55, there is an additional $ 1000 you can contribute to your HSA each year.
This HSA is your money, it cannot be taken away from you and does not 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 bills for the rest of your life (before and with Medicare). This HSA gives you the opportunity to save pre-tax dollars to pay for medical bills that may one day happen.
The question you asked is about turning 65 and being eligible for Medicare. Once you are eligible for Medicare AND have signed up for Medicare, you can no longer deposit money into your HSA. So this is important to understand and plan for when you turn 65 if you have an HSA. You can use your HSA money after receiving Medicare.
If you are eligible for Medicare but NOT enrolled in Medicare A or B, you can continue to contribute to your HSA. Once you’ve signed up for Medicare A or B, you can no longer contribute to your HSA. The money in the HSA is still your money to use in the next few years, but you cannot invest any new money, once you have Medicare A or B. If married, you can still contribute on behalf of your spouse, but only to the individual amount of $ 3650. This rule change occurs on the first of the month you turn 65. In planning for this Medicare eligibility, you must decide on Medicare and the HSA contribution. Your contribution can continue until the age of 65, but you cannot enter the full year amount, it would be a proportional amount, month by month, up to the month of your birthday. So your contributions must stop.
You can keep your HSA and the money it contains once you have Medicare. You can continue to use the money in your HSA to help pay for medical bills. You can have HSA and use HSA, even if you have Medicare A & B. Once your spouse becomes eligible for Medicare A & B and signs up for Medicare, your contributions on their behalf must also stop.
The next question is “What can I use the HSA money for to pay for?”
HSA can be used to pay for many medical bills we have to pay. The IRS’s list of qualified medical expenses is a very extensive list. You can access the complete list of the IRS at www.IRS.gov. I’ll give you some examples. The usual things we think about are; medical and medical expenses, hospital bills, ambulance trips and blood tests. Some others are health insurance premiums, long term care insurance premiums, hearing aids and batteries, smoking cessation programs, eyewear, lasik eye surgery, weight loss programs, prescription drugs and medications, home care, dog driving, drug addiction, dental care (including braces, dentures, fillings and oral surgeries), chiropractic and acupuncture.
If you have an HDHP and an opportunity to have an HSA for you and your family, I 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.
Senior Life Matters is a community-based program sponsored by Lutheran Jamestown. For questions and concerns or to contact Janell Sluga, GCMC, call 716-720-9797 or email [email protected]