By Margo Steinlage Kreider
If you’re still working at 65 and contributing to a Health Savings Account (HSA), this is one of the most important Medicare rules you need to understand:
You cannot contribute to an HSA once you enroll in any part of Medicare.
Not Part A.
Not Part B.
Not Part C or Part D.
If you do, you could face IRS penalties.
Let’s walk through how this works and what to watch for.
Why HSA and Medicare Don’t Mix
An HSA is a tax-advantaged savings account available to people enrolled in a qualified high-deductible health plan (HDHP).
To be eligible to contribute to an HSA, you must:
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Be enrolled in a qualified HDHP (All Bronze ACA plans as of 2026 are HDHP and this helps keep MAGI low for ACA subsidies!).
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Have no other disqualifying health coverage
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Not be enrolled in Medicare
That last bullet is where things get tricky.
The moment you enroll in Medicare even just premium-free Part A you are no longer allowed to make HSA contributions.
This rule comes from the IRS, not Medicare.
Why This Catches People Off Guard
For years, people were told to enroll in Part A at 65 because it’s usually premium-free if you’ve worked (or your spouse/ex spouse worked) at least 10 years and paid into the system.
Part A can help reduce hospital costs, even if you’re still covered under an employer plan.
But now that HSA-qualified plans are so common, enrolling in Part A can accidentally create a tax issue.
That’s because Medicare Part A is still considered “other health coverage” — and that makes you ineligible to contribute to your HSA.
The Benefits of an HSA (Why People Want to Keep Contributing)
HSAs are incredibly powerful retirement tools.
Here’s why people want to continue contributing:
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Contributions are tax-free
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Growth is tax-free
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Withdrawals for qualified medical expenses are tax-free
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Funds roll over year to year
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You can use the money in retirement for medical costs
Over time, an HSA can become a significant pool of money for healthcare expenses later in life — including Medicare costs.
And that’s the key distinction.
You can use existing HSA funds for Medicare expenses like IRMAA, Part D, Part C, Dental, Vision, RX copays, etc.) .
You just can’t continue contributing once enrolled.
What You Can Use HSA Funds For After Enrolling in Medicare
Once you’re on Medicare, you can still use the money already in your HSA to pay for:
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Medicare Part A premiums (if applicable)
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Medicare Part B premiums
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Medicare Part D premiums
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Medicare Advantage premiums
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Deductibles, copays, and coinsurance
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Long-term care insurance premiums (within IRS limits)
- IRMAA Surcharges
However, you cannot use HSA funds to pay for Medigap (Medicare Supplement) premiums.
The 6-Month Retroactive Rule (Very Important)
Here’s where timing really matters.
If you enroll in Medicare after age 65, your Part A coverage is retroactive for up to six months from the month prior to when you apply/submit your application (but never earlier than the month you turned 65).
That means if you apply for Medicare at 67, your Part A will be backdated six months from the month prior to your application.
And if you contributed to your HSA during those six retroactive months?
Those contributions are considered excess contributions — and that can trigger IRS penalties.
The Rule of Thumb
If you’re enrolling in Medicare after age 65:
Stop contributing to your HSA at least six months before applying for Medicare.
If you enroll right at 65 (before your birthday month), retroactivity typically doesn’t apply the same way — but this is something you should coordinate carefully.
What If You’re Already Receiving Social Security?
If you’ve been receiving Social Security benefits for at least four months before turning 65, you are automatically enrolled in Medicare Part A.
That automatic enrollment can unintentionally stop your ability to contribute to your HSA — even if you didn’t realize it.
And once you’re receiving Social Security, you generally cannot withdraw from Part A without repaying Social Security benefits received.
This is why planning ahead matters.
What Happens If You Contribute Anyway?
If you continue contributing to an HSA while enrolled in Medicare:
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The IRS may treat those contributions as excess contributions
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You could owe income taxes on the amounts
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You could face a 6% excise tax penalty
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Penalties may continue until corrected
If this happens, talk to your tax professional as soon as possible to correct it.
What About Part D Late Enrollment Penalties?
If you delay Medicare because you want to continue HSA contributions, there’s another issue to consider: prescription drug coverage.
Some high-deductible employer plans do not have creditable drug coverage under the Medicare rules.
If your coverage isn’t considered creditable and you delay Part D, you may owe a Part D late enrollment penalty later.
That penalty is:
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1% of the national base premium
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For every month you delayed
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And it lasts for life
It may be small — but it adds up over time.
This is why coordination between Medicare planning and tax planning is so important.
What If Your Spouse Is Still Working?
If your spouse is covered under a qualified HDHP and is not enrolled in Medicare, they can continue contributing to their own HSA.
The contribution just cannot be made in your name if you are on Medicare.
You can still use existing HSA funds to pay for qualified expenses for both spouses. The only caveat here is that a younger spouse’s (non medicare eligible spouse) HSA funds cannot be used to pay for the older spouse’s medicare premiums/qualified medicare expenses until the younger spouse becomes medicare eligible.
The Bottom Line
Here’s what you need to remember:
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You cannot contribute to an HSA once enrolled in any part of Medicare.
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Part A enrollment counts — even if it’s premium-free.
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Medicare Part A may be retroactive up to six months if you enroll after 65.
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Stop HSA contributions six months before applying for Medicare.
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You can still use existing HSA funds for most Medicare expenses (except Medigap premiums).
These rules can feel confusing — especially when you’re balancing retirement timing, employer coverage, Social Security, and tax strategy.
If you’re still working past 65 and contributing to an HSA, make sure your Medicare enrollment timing is coordinated carefully with your tax advisor, wealth manager, and insurance professional.
A little planning here can prevent unnecessary penalties later.
Mahalo!
