1. If I enroll Medicare, am I eligible for HSA contributions?
a. No, enrolling in any part of Medicare (Parts A, B, C, or D) makes you ineligible for HSA contributions. This is true even though Part A is provided at no cost for most people.
2. If I postpone enrolling in Medicare, but my spouse does enroll, will it affect my eligibility for HSA contributions?
a. No, your spouse’s enrollment has no affect on your HSA contributions and your spouse’s qualified expenses can be paid from the HSA. Remember that your spouse’s Medicare premiums cannot be paid from your HSA unless you are not enrolled in Medicare.
3. Will electing to take my Social Security benefits affect my eligibility for HSA contributions?
a. Yes, enrolling in social security automatically enrolls you in Medicare Part A. If you wish to postpone Medicare you must also postpone your Social Security benefit. You should seek a financial advisor to decide if postponing these benefits is the right choice for you.
4. If I enroll in Medicare during the year, when will contributions to my HSA stop?
a. HSA contributions will stop the first day of the month your Medicare coverage is effective. You may wish, however, to make additional contributions into your FSA to continue to pay for medical expenses on a pre-tax basis and save the accumulated funds in your HSA account for expenses at a later time. Again, you should seek the advice of your financial planner to determine the best strategy for you.
5. How does enrolling in Medicare affect my opportunity to use any dollars remaining in my HSA?
a. You will continue to be able to use the money in your HSA to pay for qualified expenses for you, your spouse and your dependents on a federal tax-free basis (state tax laws may vary). This includes Medicare premiums for you and your spouse as well as COBRA premiums for your spouse or dependents. HSA contributions cannot be used to reimburse Medigap or Medicare Supplement Plan premiums.
6. What if I delay receiving Medicare when I am first eligible, to fund my H.S.A.?
a. If you delay receiving Medicare when you first qualify, you must stop contributions to your H.S.A. six months before you collect Social Security. Medicare Part A coverage is retroactive for up to six months. So you risk paying a penalty on the money you put into the account during that period.
7. Can my spouse and I both be enrolled as family coverage on the HSA under separate employers?
a. Yes, both you and your spouse may be enrolled in an HSA and receive the family contribution rate from your respective employers so long as the amount contributed does not exceed the IRS set annual family maximum.
8. Can I enroll on the HSA as family coverage and my spouse enroll under his employer under a non-HSA plan with family coverage?
a. Unfortunately, the regulations do not allow dual coverage when one plan is a HSA and the other plan is a non-HSA with first dollar coverage.
Allan Phillips is a Managing Principal at UBF and has over 25 years experience as a senior health care and pension consultant. He has worked with Fortune 50, 500 and mid-size companies to assess, develop, and implement integrated benefits programs for global organizations.