What is an HSA?

• Health Savings Accounts (HSAs) are for individuals and families with a qualifying high-deductible health plan
• Funds that are in an HSA are not taxed, either when contributing to the account or using them to pay for qualified medical expenses

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What is an HSA?

There are limits to how much money can be deposited into the account each year:

• $3,850 for individuals in 2023
• $7,750 for families in 2023
• Those that are 55 and older can contribute an additional $1,000 as a catch-up contribution

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HSA-Eligible Health Plans

In 2023, an HSA-eligible high-deductible health plan must have:

• A minimum deductible of $1,500 for individual coverage
• A minimum deductible of $3,000 for family coverage
• A maximum out-of-pocket limit of $7,500 or less for individual coverage
• A maximum out-of-pocket limit of $15,000 or less for family coverage

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HSA Contribution Eligibility

To contribute to an HSA, you must:

• Be enrolled in an HSA-eligible health plan
• Not enrolled in a low-deductible health plan or a flexible spending account (FSA)
• Not claimed as a dependent on someone else’s tax return
• Not enrolled in Medicare

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Medicare & HSA Contributions

• If you enroll in either Medicare Part A and/or Part B, you can no longer contribute pre-tax dollars to the HSA
• If you contribute to your HSA pre-tax after any part of Medicare begins, you will be responsible for reporting those as “excess contributions” on your taxes and will be subject to a 6% excise tax charge

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Delaying Medicare

• If you choose to delay your Medicare coverage in order to continue to contribute to an HSA, you’ll also have to delay receiving your Social Security benefits
• If you’re receiving Social Security benefits, Medicare Part A is mandatory
• For example: to continue your high-deductible health plan coverage through your or your spouse’s current employer and HSA contributions, you will need to delay Part A, Part B and your Social Security benefits

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Delaying Medicare

• When you’re ready to enroll in Medicare (either due to loss of employment or coverage) you will need to stop contributing to your HSA at least:
  • 6 months prior to signing up for any part of Medicare, or
  • The month you turn 65, if later
• This is caused by Medicare retroactively making your Part A benefits effective 6 months from the month you sign up for benefits, but no earlier than your 65th birthday month

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Using HSA Funds with Medicare

You can continue to withdraw money from your HSA after Medicare begins to pay for qualified medical expenses, including:

• Part B premiums, deductibles, copays and coinsurance
• Part D premiums, deductibles, copays and coinsurance
• Medicare Advantage premiums, deductibles, copays and coinsurance

NOTE : HSA funds cannot be used to pay for Medigap (Medicare Supplement) premiums

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Getting Ready for Medicare

• As you approach Medicare eligibility, make sure you notify your employer to terminate your HSA contributions the month you turn 65 if you plan to start your Medicare and/or Social Security benefits right away
• If you have chosen to delay Medicare and your Social Security benefits, stop any HSA contributions at least 6 months prior to signing up for benefits, but no earlier than the month you turn 65

Sources

• https://www.medicareinteractive.org/get-answers/coordinating- medicare-with-other-types-of-insurance/job-based-insurance-and- medicare/health-savings-accounts-hsas-and-medicare
• https://www.nerdwallet.com/article/insurance/medicare/hsa-and-https://www.nerdwallet.com/article/insurance/medicare/hsa-and-medicare#%3A%7E%3Atext%3DThere%27s%20no%20penalty%20for%20having%2Ca%206%25%20excise%20tax%20charge
• https://www.uhc.com/news-articles/medicare-articles/hsas-and- medicare#:~:text=The%20good%20news%3A%20You%20can%20keep%2 0using%20your%20HSA%20funds&text=You%20can%20even%20use%2 0your,to%20pay%20for%20Medigap%20premiums.
• https://www.fidelity.com/learning-center/smart-money/hsa- contribution-limits

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