If you already have a Health Savings Account (HSA) and don’t know whether you can use it for Medicare, Medicare Advantage, or Medigap expenses, Senior65.com is here to guide you.
Note: Senior65.com does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult IRS publications or your own tax, legal, and accounting advisors before engaging in any transaction.
What is an HSA
Since this guide is for those who already have an HSA, you probably already know what an HSA is but we have included this section just to make sure we are all on the same page. According to the Centers for Medicare & Medicaid Services, a Health Savings Account (HSA) is “a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your out-of-pocket health care costs.”
You can use your HSA funds whenever you need to for qualified medical costs, but you can only contribute to an HSA if you have a plan that qualifies, usually called a High Deductible Health Plan (HDHP). An HSA is basically a tool that allows you to put away money to pay for certain Medical expenses tax-free.
Remember: Once you’re on Medicare, you’re no longer eligible to contribute to your HSA. HSA contribution rules can be tricky so please check with your tax professional on when to stop contributing to your HSA to avoid a penalty. In some cases, you will want to stop 6 months before applying for Medicare.
Can I use an HSA to Pay my Medicare A and B Premium?
Yes, according to the IRS, you can use your HSA account to pay for Medicare Part A and Part B premiums. While Part A typically has no monthly premiums, those required to pay it can use their HSA. Most everyone on Medicare has to pay Part B premiums and you can use your tax-free HSA money to pay for it.
Now if you are currently receiving your Social Security retirement benefit, Medicare can deduct your premiums directly from your Social Security. If this is the case, your HSA can still reimburse you with tax-free withdrawals even for past Medicare Premiums. Please check with your tax pro on how to do this.
Can I use an HSA to Pay my Medigap Premium?
Medigap, also known as Medicare Supplement Insurance, is not considered a qualified medical expense under HSA rules. You can use your HSA to pay your Medigap premium but you would pay taxes on that amount. If you withdraw HSA funds for non-qualified medical expenses after age 65, you won’t face a penalty, but the amount withdrawn will be subject to income tax. So, if you want to maximize the tax-free savings of an HSA, we suggest finding other qualified expenses for your HSA like dental or vision care.
Medigap policies help cover out-of-pocket costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles. Since Medigap premiums don’t fall under the list of eligible expenses defined by the IRS for HSAs, using your HSA to pay for them would result in that amount being treated as a taxable distribution. So, to be clear, you can apply the HSA funds to your Medigap premiums but you would have to pay taxes on the amount you take out. Don’t do it if you can avoid it.
There are plenty of ways, other than your HSA, to pay for a Medigap Plan. Check, credit card, and automatic bank draft (which usually come with discounts) are often acceptable payment options for Medigap.
If you’re looking for ways to lower the costs of your MedSupp plan, get an instant quote here. If you have questions, give us a call at 800-930-7956, and we’ll gladly guide you. There are no extra fees and we’re here to help. We receive commissions directly from insurance providers at no extra cost to you.
Get a Medigap Quote Enroll in Medigap
Can I use an HSA to Pay my Medicare Part D Premium?
Yes, you can use your HSA funds to pay for tax-free Medicare Part D monthly premiums. Beyond premiums, you can also include amounts you pay for prescribed medicines, drugs, insulin and certain over Note: If you import drugs from other countries (e.g. Canada) they are not considered qualified medical expenses.
If you’re thinking about enrolling in Medicare Part D, check out PlanEnroll to compare plans in your area
Can I use an HSA to Pay my Medicare Advantage?
You can use your HSA to cover Medicare Advantage (Part C) premiums. Like other parts of Medicare, consider these premiums as qualified medical expenses. Using your HSA funds for them is penalty-free..
If you’re still unsure about Medicare Advantage, check out our Complete Medicare Advantage Guide here. If you’re thinking about getting a plan, just click here for an instant Medicare Advantage online quote. Feel free to leave a question below and a Senior65.com team member will gladly assist you for free.
Learn More about Medicare Advantage Get a MA Quote
Can I use my HSA for my spouse’s medical expenses?
Yes, the great things about Health Savings Accounts (HSAs) is their flexibility. You can use your HSA funds to pay for qualified medical expenses for not only yourself, but also your spouse and dependents. This includes your children, but also other family members who depend on you financially. “Dependents” refers to anyone you claim on your tax return as a dependent. For example, if you have an elderly parent who relies on you financially, you can use your HSA to pay for their medical expenses. Rules around spouses and HSA can be tricky so, one again, PLEASE check with a tax pro before proceeding.
What other purchase can I make with HSA now that I’m retired?
Even after retirement, you can still use your HSA funds for a variety of qualified medical expenses. Below are some purchases and expenses you can cover with your HSA (full list here)
- Prescription Medications: You can use your HSA to pay for prescription drugs.
- Dental and Vision Care: Expenses like dental exams, glasses, contact lenses, and hearing aids are all qualified medical expenses.
- Long-Term Care Insurance Premiums: You can use your HSA to pay for long-term care insurance, but there are limits on how much you can withdraw tax-free depending on your age.
- Home Health Care: If you need in-home medical care or other home health services, your HSA can cover these costs.
- Medical Equipment: You can use HSA funds to purchase items like wheelchairs, crutches, or other necessary medical devices.
- Over-the-Counter Medications: Since 2020, you can use your HSA to buy certain over-the-counter medications without a prescription.
- Alternative Treatments: HSA may cover certain alternative medical treatments, such as acupuncture or chiropractic care..
- Health-Related Travel: If you need to travel for medical care, your HSA can cover transportation and lodging expenses.
If you withdraw HSA funds for non-qualified medical expenses after age 65, you won’t face a penalty, but the amount withdrawn will be subject to income tax.