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HSAs, HDHPs and Medicare, Oh My!

HSAs, HDHPs and Medicare, Oh My!

Sometimes medical insurance rules can seem as scary as lions, tigers, and bears.  Oh my! Having a knowledgeable agent can take a lot of the uncertainty out of your benefit decisions.


This is one of those situations where the rules are clear, but their application can be difficult to understand.


Can someone who is over 65 continue to pay into an HSA? Yes.

Can someone who has Medicare continue to pay into an HSA? No.


Let me explain how that works.  Many of the 65 and over crowd are continuing to work past their Medicare birthday.  And for people who work with companies that have 20 or more employees, their group plan if they choose to stay on it is considered the primary payer and they do not have to sign up for Medicare.  If an employee stays on with a company with more than 20 employees that provides an HDHP and either the employee or the company pays into an HSA, that is allowed.


A few caveats.


  1. If the employee enrolls in Medicare Parts A or B, even if all of the above is true, they cannot continue to put money into an HSA (or allow their company to do it for them).  

  2. If the employee works for a company with less than 20 employees, then they must sign up for Medicare Parts A and B and have some plan that counts as a qualified prescription drug plan to avoid having to pay fees later.

  3. If the employee pays all or a portion of their healthcare through payroll deduction, it is worth taking a look at the cost and coverage of Medicare at age 65 to see if that is a better deal for them.  If the benefits are fully employer-paid that is the better deal.

  4. If you take Social Security at age 65 you may be automatically enrolled in Part A.  Make sure you find out if you’re planning to enroll in Social Security and stay on an employer HDHP that you don’t want to enroll in Part A.

  5. If you are under 65 and disabled, and also covered under an employer HDHP, you will automatically be enrolled in Medicare after your 25th month and therefore will be ineligible to contribute to an HSA.


But wait!  If I delay taking Medicare, when can I decide to take it?

Losing your qualified health plan when you retire opens a special enrollment period or SEP.  Make sure you talk to a health insurance agent who is well-versed in Medicare when you’re planning your retirement to make sure that you get everything in on time and don’t lose coverage!  Some large companies continue healthcare coverage after retirement, in which case you should talk to your HR department to coordinate this transition!


If you need an expert to help guide you through medical benefit decisions, feel free to give us a call at Cedar River Insurance at 517-580-3819.  We stay informed about the details of the healthcare world so you don’t have to!