If you're currently contributing to your HSA, and you plan to start your Medicare coverage the month you turn 65:
- Make sure all HSA contributions end before your 65th birthday month.
- If your birthday is on the first of the month, make sure you stop your contributions by the beginning of the month before your birthday month.
If you enroll in Medicare after turning 65, your coverage can become effective up to 6 months earlier. You and your employer will need to end your HSA contributions up to 6 months before enrolling in Medicare since Medicare back dates your Part A coverage from the date you enroll.
If you continue to work after age 65, and you or your employer is still contributing to an HSA:
- Stop making contributions to your HSA up to 6 months before applying for Medicare Part A only or Part A and Part B or starting your Social Security retirement benefits.
- When you receive Social Security retirement benefits, your Part A coverage is back-dated 6 months (but no earlier than the first month you're eligible for Medicare) to give you 6 months of back-dated benefits. If you contribute to your HSA during those 6 months, you may face a 6% excise tax and an income tax for those contributions.
- This "6-month lookback" starts when you enroll in Medicare or begin your Social Security retirement benefits. However, you can withdraw those contributions by the end of the tax year to avoid the excise tax.
This HSA restriction leads some working past age 65 to defer Medicare and maintain their current employer-based health insurance coverage so they can keep contributing to their HSA until they retire.
Remember, after you enroll in Medicare, you can use existing funds in your HSA for qualified medical expenses, including your monthly premiums for Parts A, B, C, and D (but not Medigap premiums).