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Ask Ms. Medicare

Can I Have a Health Savings Account as Well as Medicare?

No, but understanding the details of this IRS rule may help you get around it

Q. I have health insurance from my employer in the form of a Health Savings Account. But I’m told I can’t use it if I’m eligible for Medicare. Is this correct? If so, what can I do to keep this insurance if I continue working after age 65?

A. A Health Savings Account (HSA) is a type of health insurance offered by an increasing number of employers. It combines a high-deductible health plan with a tax-free health savings account to which the employee and the employer can contribute. (It is not the same as a Medicare Medical Savings Account, a health plan available only to Medicare beneficiaries, which is not discussed in this article.)

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IRS rules say that you can’t contribute to an HSA if you’re enrolled in Medicare. You can draw on funds already in the account but you can't add to them. So it’s important to know how you can get around this rule if you have an HSA at work and want to continue working beyond age 65.  Here’s what you can do, according to different situations:

  • If you’re eligible for Medicare but have not filed an application for either Social Security retirement benefits or Medicare, you need do nothing. As long as your employer has 20 or more employees, you have the right to postpone applying for Social Security and Medicare — and therefore can continue to contribute to your HSA — until you stop working. There is no penalty for this delay, , and when your employment ends you’re entitled to a special enrollment period to sign up for Medicare. (For more details, see the related article “Medicare When Working Beyond 65.”)

Next: What if you're covered under your spouse’s HSA at work? »

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