Many baby boomers who are still working don’t understand the details behind health savings accounts and Medicare coverage. Connexion Insurance Solutions shares important information to help you plan ahead and be in the know.
If you have a health savings account (HSA), and you will soon be eligible for Medicare, it is important to plan ahead and understand how enrolling in Medicare will affect your HSA.
If you enroll in Medicare Part A and/or B, you can no longer contribute to your HSA. Generally you cannot have any health coverage other than a high deductible health plan to contribute into an HSA. The month you enroll in Medicare, typically the month of your 65th birthday, the HSA account overseer switches the contributing balance to $0 per month. However, you may withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses (deductibles, premiums, copays or coinsurances). If you use the HSA account for qualified medical expenses, it will continue to be tax-free.
Delaying Medicare and HSA Contributions
Whether you should delay enrollment in Medicare so you can continue contributing to your HSA depends on your circumstances.
- If you work for a small employer (fewer than 20 employees), you typically need to take Medicare when you first qualify even though you will lose the tax advantages of your HSA. Healthcare coverage from small employers pays secondary to Medicare. This means that if you fail to enroll in Medicare when you are first eligible, you may have little or no health coverage.
- If you work for a large employer (more than 20 employees), you can decline Medicare Part B and enroll later when you lose your current employer coverage. Healthcare coverage from large employers pays primary before Medicare so you may not need to have Medicare in order to pay your health expenses. However, you cannot decline Medicare Part A. An exception to this is if you’re not accepting Social Security benefits currently – you could decline Part A and preserve your HSA tax benefit. As soon as you want to stop contributing to the HSA (and are if you are still currently working) you can enroll in Part A and get six months of retroactive coverage.
To learn more about how health savings accounts and Medicare work, please contact Connexion Insurance Solutions at 1-877-217-3279 or MAQuestions@connexioninsurance.com.
Content contributed by Lance Ghiorso, senior account executive, Connexion Insurance Solutions. The Polyclinic has partnered with Connexion Insurance Solutions to provide Medicare expertise for our patients for more than 10 years. Licensed and certified Medicare insurance specialists at Connexion assist patients with the complexities of today’s Medicare market. They help patients review benefit preferences, analyze prescription drug needs, and find and enroll in plans accepted by providers. The team is dedicated to providing unbiased recommendations and can represent all plans at The Polyclinic.