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Working Previous 65? Keep in mind, Medicare and HSAs Don’t Combine

As soon as the person is now not coated by the employer-sponsored plan, they’ve an eight-month window to enroll in Medicare Half B. Failure to enroll throughout that window will end in late enrollment penalties, which final for the person’s lifetime.

If the person misses the eight-month deadline, they’ve a restricted particular enrollment interval by which to use (that interval is Jan. 1 to March 31). Nevertheless, protection then doesn’t start till July 1. Even when the person enrolls throughout the particular enrollment interval, late enrollment penalties will enhance their price of protection for all times.

Assuming the person doesn’t defer Medicare, after 65, a person can proceed to take part in an HSA-eligible medical health insurance plan to offer protection along with Medicare. Nevertheless, even when a Medicare-enrolled particular person continues to take part within the HSA-eligible plan, they can not proceed to contribute to the HSA as a result of additionally they have Medicare protection.

They’ll, nevertheless, proceed to make use of funds that they’ve already amassed in HSAs. These funds proceed to be obtainable tax-free as long as they’re used to pay for qualifying medical bills (together with conventional Medicare premiums for Elements A, B, C and D, however excluding premiums for supplemental Medicare applications). Taxpayers can use HSA funds to reimburse themselves for Medicare premiums which might be withdrawn straight from their Social Safety advantages (however it’s essential to maintain data to substantiate the HSA withdrawals).


HSAs present a strong tax-preferred financial savings automobile to cowl the ever-increasing prices of medical bills throughout retirement. That mentioned, it’s essential for purchasers to know the complicated guidelines that apply as soon as the taxpayer turns into eligible for Medicare protection to keep away from penalties and shock taxes.

Whereas there’s proposed laws that will change the rule, underneath present regulation, people are now not eligible to contribute to an HSA as soon as they enroll in Medicare.

(Pictured: Robert Bloink and William H. Byrnes)

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