Using Your Health Savings Account for Medicare
Make sure you know the rules and maximize your benefits
Understanding all the rules and facts about Medicare and your health savings account (HSA) can get complicated. Americans who began receiving Social Security benefits prior to age 65 were automatically enrolled in Medicare upon turning 65 and became ineligible to contribute to a HSA account. However that doesn’t mean you can’t take advantage of using your HSA for qualified medical expenses as long as the account has funds.
If you are one of many who has the Medicare premium deducted from your Social Security check, you may reimburse yourself from your HSA for the Medicare premiums paid from that check. However, you may not use your HSA to pay for Medigap insurance premiums. Using HSA money to pay for Medicare is a great choice. Medicare does not cover all medical expenses and it can be challenging to pay for Medicare with pre-tax dollars. You may use your HSA to pay for Medicare parts A, B, D and Medicare HMO premiums penalty-free and tax-free. Your HSA may also be used to pay the employee portion of premiums for employer-sponsored health care.
If you are one of many who has the Medicare premium deducted from your Social Security check, you may reimburse yourself from your HSA for the Medicare premiums paid from that check. However, you may not use your HSA to pay for Medigap insurance premiums.
As long as you are over age 65, withdrawals from your HSA are always penalty-free. Although any withdrawals from your HSA made for purposes that do not qualify as medical expenses will be subject to income taxes. If you have not maximized your contribution for your last year of HSA eligibility, you may still make one last HSA contribution until April 15 of the year following the tax year you lose HSA eligibility.
To discuss your questions about Medicare or your HSA, or if you have general questions regarding your financial future, contact the team at Bayntree Wealth Advisors at email@example.com or 888-255-3200.
Bayntree Wealth Advisors, located in Phoenix and Scottsdale, Arizona, provides comprehensive financial planning, income planning and wealth management. The Bayntree team specializes in all aspects of your financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.
Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.