Answering common questions about HSAs and Medicare enrollment
By Kelley Long | Originally posted on Journal of Accountancy
Americans age 55 and over hold an estimated $52 billion in their health savings accounts (HSAs), according to HSA investment company Devenir's most recent research. It's no surprise that as clients approach Medicare enrollment, they are increasingly interested in continuing to fund their HSAs to provide for current and future health care expenses.
Unfortunately, the guidance on how HSA contribution rules intersect with Medicare enrollment is limited, with many clients receiving conflicting answers from their HSA providers, Medicare and Social Security representatives, and even their own tax professionals. The purpose of this article is to provide clarity on three of the most common questions that JofA readers have been asking in response to a prior article, "Medicare's Tricky Rules on HSAs After Age 65," JofA, July 1, 2021.
Q: I'm enrolling in Medicare but continuing to work and keeping my employer-based health plan for my spouse/family. Can I still contribute to my HSA?
A: The short answer is no, but your spouse covered under your health plan may still be able to fund their own HSA once you become ineligible.
Once you enroll in Medicare, you lose your eligibility to contribute to an HSA, but your spouse (and/or young adult children) covered under your high-deductible health plan (HDHP) could contribute up to the family amount to their own HSA.
Let's break it down with an example.
Kevin turns 65 on March 18, 2025, and, while continuing to work, is enrolling in Medicare, as his employer's plan is not considered qualifying coverage for purposes of deferring Medicare Part B enrollment. His Medicare enrollment date would be effective March 1, meaning he would now have other health coverage as of that date, rendering him ineligible for HSA contributions after March 1. However, he plans to continue family coverage of his HDHP through his employer so that his spouse, Winnie, who is age 62, is covered until she reaches Medicare eligibility.
Based on the eligibility rules, Kevin would only be permitted to make a contribution to his own HSA for two months of the year, or $1,592 ($8,550 is the family limit for 2025, plus $1,000 is the catch-up amount for individuals aged 55 and older, so $9,550 × 2/12 = $1,592). But what about Winnie? For the year that Kevin enrolls in Medicare, she can fund her own HSA with the remaining balance of $7,958 and then make a full family-level contribution in the subsequent years until she also enrolls in Medicare.
Why a full family-level contribution? This is often confusing for clients because they assume that if Kevin is no longer eligible to contribute to his HSA, Winnie must use the individual coverage contribution limits. However, the type of HDHP in place (family or individual coverage) dictates the HSA contribution limit. Since Kevin is the covered individual, he must elect family coverage in order to include Winnie, so she would have family-level contribution limits based on the rules.
Another way to think of it is to examine the intent of having different contribution levels for different coverage levels. Practically speaking, since family coverage health care plans have higher deductible and co-insurance limits (typically double that of individual coverage), it would make sense that a person subjected to those higher amounts would be able to make a higher contribution to the HSA intended to assist with the out-of-pocket expenses of the covered family members.
Winnie's contribution amount is determined by the following facts:
She is covered by an HDHP and has no other health coverage.
She is not enrolled in Medicare (even though her spouse is, that coverage doesn't affect her).
She can't be claimed as a dependent on anyone else's tax return.
She has family coverage, and the 2025 contribution limit for that coverage level is $8,550.
She is 62, so she is eligible for the $1,000 catch-up contribution.
She is married, and she adjusts her contribution for any eligible amount her spouse contributes to their HSA in each tax year.
In short, Kevin and Winnie will still enjoy full HSA contribution limits until Winnie enrolls in Medicare; they will just have to change the contributions from Kevin's account to Winnie's, as there is no such thing as a joint HSA. The good news is that spouses may use funds in each other's accounts without limitation, regardless of age or other coverage.
Source for this answer: The best available official source is IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, which doesn't address the question directly but says: