If you participate in a Health Savings Account (HSA) and are approaching age 65 or Medicare enrollment due to disability, it’s important to understand how retiring and enrolling in Medicare Part A may impact your HSA contributions. Due to IRS and Medicare regulations, you must carefully time your HSA contributions to avoid costly penalties or tax issues. This page outlines steps you should take to ensure compliance and protect your savings as you transition to Medicare.

To receive university contributions to the Health Savings Account, you must receive a paycheck with regular earnings:

If you contribute to the Health Savings Account (HSA), and are nearing age 65 and enroll in Medicare Part A, please read and take action as needed regarding a conflict between IRS regulations and Medicare requirements.

• The issue: Anyone nearing age 65 who is enrolled in a qualified high-deductible health plan (Consumer-Directed Health Plan) with a Health Savings Account (HSA), who enrolls in Medicare Part A, will experience a Medicare-required “look-back period” of six months. That “look-back period” overlaps with the timeframe during which you may have had either or both employer and employee contributions made to your HSA. IRS regulations state that an individual cannot receive or contribute to an HSA if covered by Medicare or any other health-care insurance. If the individual were to be audited by the IRS, taxes and penalties could apply to the amount contributed to the HSA.

• The proposed solution: In order to avoid potential tax issues, you want to stop your HSA contributions so you have six months of no contributions before you file for Medicare.

For More Information

For more information, discuss your situation with a qualified tax adviser.