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Senior Life Matters: Questions About Health Savings Accounts

Question: My friend told me that when I turn 65 and have Medicare, I can no longer have an HSA. Is that correct?

Answer: First, let’s define an HSA, (Health Savings Account) is an account that allows an individual or family to save pre-tax dollars to use for paying qualified medical expenses. HSA’s are overseen or managed by a bank, credit union or insurance company. Individuals in a High Deductible Health Insurance Plan (HDHP) are allowed to establish an HSA.

When you (and sometimes your employer) adds money into this HSA, it is pre-tax. You have NOT paid income tax on the money. This allows you to save money on taxes and save to pay for medical expenses down the road. In 2022 the maximum amounts you are allowed to put into your HSA is $3,650 for an individual and $7,300 for a family. If you are over 55 years of age, there is an additional $1000 you can contribute each year to your HSA.

This HSA is your money, it can’t be taken away from you, and it doesn’t need to be spent by the end of the year. The HSA continues to grow as you add to it and is available to you for medical expenses for the rest of your life (before and with Medicare). This HSA offers you an opportunity to save pre-tax dollars to pay for medical expenses that may happen someday.

The question you asked has to do with turning 65 and being eligible for Medicare. Once you are eligible for Medicare AND sign up for Medicare, you can no longer put money into your HSA. So this is important to understand and to plan for when turning 65, if you have an HSA. You can use your HSA money after you have Medicare.

If you are eligible for Medicare, but do NOT sign up for either Medicare A or B, you can continue to contribute to your HSA. Once you enroll in Medicare A or B you can no longer contribute to your HSA. The money in the HSA is still your money to use in the coming years, but you cannot put in any new money, once you have Medicare A or B. If married, you can still contribute on behalf of your spouse, but only to the individual amount of $3650. This rule change happens the first of the month that you turn 65. In planning for this Medicare eligibility, you must decide about Medicare and the HSA contribution. Your contribution can continue up until you are 65, but you cannot put in the full year amount, it would be a pro-rated amount, month by month, up until your birthday month. Then your contributions must stop.

You can keep your HSA and the money that is in it once you have Medicare. You can continue to use the money in your HSA to help pay for medical expenses. You can have the HSA and use the HSA, even if you have Medicare A & B. Once your spouse becomes eligible for Medicare A & B and signs up for Medicare, then your contributions on their behalf must stop as well.

The next question is, “What can I use the HSA money to pay for?”

The HSA can be used to pay for many medical expenses that we incur. The IRS list of Qualified Medical Expenses is a very extensive list. The IRS complete list can be accessed on the www.IRS.gov website. I will give you some examples. The usual things we think of are; doctor & medical expenses, hospital bills, ambulance rides and blood work. Some others are health insurance premiums, long term care insurance premiums, hearing aids and batteries, smoking cessation programs, eye glasses, lasik eye surgery, weight loss programs, prescription drugs and medications, nursing home care, guide dog, drug addiction, dental care (including braces, dentures, fillings & oral surgeries), chiropractor and acupuncture.

If you have a HDHP and an opportunity to have an HSA for yourself and your family, I would strongly encourage you to contribute to it. Talk to your employer and see what the rules are for your situation and an HSA. This could be used for the overall and long term financial health of you and your family.

Senior Life Matters is a community based program sponsored by Lutheran Jamestown. For questions and concerns or to reach Janell Sluga, GCMC, call 716-720-9797 or e-mail SLM@lutheran-jamestown.org.

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