I only have #1. No COBRA, no unemployment, and no Medicare.
But it’s good to know I can claim the LTC premium.
For single people, IRMAA can bite a lot sooner
And for married couples it is worth keeping in mind that someday one of you will have to file single, barring both passing in the same year.
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Hi, I have a similar question. I am over age 65, still working but nearing retirement. I am still contributing to HSA. I plan to enroll in Medicare upon retirement but not take SSA for some time. What is downside to contribute to HSA until the last day of working? Thanks for any advice.
Assuming you apply for Medicare earlier than 7 months after your retirement month, you will be making excess contributions, which will need to be removed (with taxes paid on any earnings) from the HSA and/or could be subject to excess contribution penalties.
Since you are over 65, there is a 6 month look back period beginning the month that you apply for Medicare. (Not the month your benefits start.) During that 6 month look back, you are not eligible to contribute to an HSA. For example, let’s say you apply for Medicare in September, in order to start getting Medicare benefits in October. Beginning in March, you are no longer an ‘eligible person’ for HSA contributions. That means that your pro rata contribution will be based on 2 months of eligibility (Jan & Feb), so that you can make 2/12 of the maximum contribution you would have been eligible for.
In the year that you apply for Medicare, if you submit your application in or before July, you are not eligible to make HSA contributions. If you apply in June or earlier, your prior year HSA contribution eligibility will be reduced, because the look back does cross years. So if you submit your application in April, 2026, beginning in October, 2025, you will not be eligible to make HSA contributions. Since you are over 65, you have a $1000 catch-up contribution in addition to the maximum allowable coverage for your coverage type. So your 2025 HSA contribution will be limited to 9/12 of $5300 ($4300 + $1000) if you have single coverage or 9/12 of $9550 ($8550 + $1000) if you have family coverage.
All of that said - once you stop working, you only have 8 months to apply for Medicare without being subject to a penalty on your premiums. COBRA does not count as creditable coverage - only coverage while you are still employed counts. On the other hand, it generally takes at least one month after you submit your application for Medicare benefits to begin. So, when starting Medicare after your 65th birthday, you need to carefully plan when to submit your application vs. your eligibility to make HSA contributions.
AJ
We briefly had HSAs before we retired (before age 60). Still not on Medicare. I can’t contribute since I’m not working. Are there any rules for using the HSA after going on Medicare? It’s not a lot of money, since our company introduced the benefit maybe 2 years before we retired.
I’m wondering if I need to start using it before I apply for Medicare. I’m currently on an exchange Bronze plan.
Thanks much. Very helpful.
You don’t have to be working to contribute to an HSA. You can’t contribute through a payroll deduction, so you lose out on the SS/Medicare tax break that you get if you contribute through your payroll. If you are an eligible person (i.e. you have an eligible HDHP insurance plan as your only insurance) you can make direct contributions to an HSA (similar to an IRA) and get the Federal income tax break. For 2024, the tax break was an income adjustment on line 13 of Form 1040 Schedule 1 and you also need to file Form 8889.
You can use HSA money for any qualified medical expenses incurred after you established and funded the HSA. Qualified medical expenses include Medicare premiums for Medicare Parts A, B, C & D - but not Medicare supplement or Medigap premiums.
You can read more about HSA qualified medical expenses in IRS Pubs 969 2024 Publication 969 and 502 2024 Publication 502
If it’s designated as an HSA eligible plan, then you can make HSA contributions for 2025. That said, when signing up for an exchange plan, you generally need to look specifically for HSA eligible plans, which may be few and far between. In my area, only 2 of the 26 plans available to me are HSA eligible.
AJ
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