With retirees facing a double whammy of inflation and tariffs driving up the cost of everything, many are looking for ways to stretch their dollars. One way to do this for those with health savings accounts is to tap your HSA to help pay your Medicare premiums.
There seems to be a lot of confusion about whether you can pay your Medicare premiums from your health savings account (HSA). Technically, you cannot directly pay your Medicare premiums from your HSA. But yes, you can use your HSA funds to pay your Medicare premiums. Keep reading as we explain.
How To Pay Medicare Premiums With Health Savings Account Funds
Most retirees pay Medicare premiums that are deducted from their Social Security checks. This is why I say you can’t pay your Medicare premiums directly from your health savings account. However, you can still reimburse yourself for the Medicare premiums paid via your Social Security check.
Once you’ve turned 65 and enrolled in Medicare, you can make tax-free withdrawals from your HSA, Medicare Part B and Medicare Part D. Medicare Advantage plans are also eligible for reimbursement. However, Medicare supplement premiums do not qualify for tax-free reimbursement from a health savings account.
Can You Contribute To An HSA Once You Enroll In Medicare?
There are no Medicare plans that qualify as HSA-eligible. Unfortunately, that means you will no longer be eligible to make further contributions to your HSA once you enroll in Medicare. That being said, you will still be able to have an HSA, either earning interest or being invested.
From there, you can reimburse yourself for the numerous medical bills you will continue to face in retirement. Even if you are the healthiest retiree, costs for routine testing and medical visits can still add up.
Why HSAs Matter for Retirees
HSAs offer a triple tax advantage: contributions reduce taxable income; investments grow tax-free, and qualified withdrawals are tax-free. For high-income earners and couples managing retirement budgets, that translates into an efficient way to pay for health-related costs without increasing taxable income in retirement. Because healthcare is a significant and uncertain retirement expense, converting an HSA into a long-term medical reserve is often the most tax-efficient strategy available.
Is There An HSA Withdrawal Deadline?
One of the biggest advantages of an HSA is that there is no deadline for withdrawing money from your account. You can keep the money growing in your account and reimburse yourself well into the future. If handled wisely, the tax savings could be huge.
For example, even if you were in your 20s or 30s today, you could invest and grow your HSA account balance for decades. From there, you could use your funds to reimburse yourself for expenses incurred between now and retirement, or you could wait and then use your health savings account to reimburse yourself for Medicare expenses (way in the future) once you retire.
2025 Health Savings Account Limits
HSA contribution limits have increased for 2025. If you are single, the contribution limit is $4,300. The 2025 HSA contribution limit for families is $8,550, a $250 increase from the 2024 limit.
For HSA users 55 and older, you can contribute an extra $1,000. This amount will remain unchanged in 2025.
What You Can Pay For With HSA Funds
You can use an HSA to pay or reimburse a broad list of qualifying expenses such as medical copays, prescriptions, dental and vision care and certain over-the-counter medications. Importantly for retirees, Medicare Part B and Part D premiums, as well as Medicare Advantage plan premiums, qualify for tax-free HSA distributions. Long-term care premiums may be partially eligible under IRS limits. Premiums for Medigap policies do not qualify for tax-free HSA reimbursement.
HSA Eligible Expenses
A wide variety of health care spending is considered a qualifying expense for HSA reimbursement. Some are obvious, like medical copays, dental cleanings, prescriptions and other exciting things like colonoscopies (not something I’d recommend finding the cheapest provider for). Others are less obvious, like over-the-counter drugs or even sleep aids.
Surprisingly, you can’t pay health insurance premiums with HSA funds. The exception to this is that Medicare premiums are eligible for HSA reimbursement.
With the cost of healthcare skyrocketing for retirees and the triple tax advantages, you may want to use your health savings account as a de facto retirement account. Not to mention that, as we are (hopefully) living longer, healthier lives, even routine health care costs can be budget-busting for many retirees. Talk with your tax-planning-focused financial planner about how to maximize your benefits from an HSA to help ensure your financial security as you age. You can protect your retirement cash flow and reduce taxable withdrawals by making your HSA a central pillar of your health-cost plan in retirement.
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