Medicare@work
A blog about Medicare. What you and your employees need to know
Advice – Stop Your HSA When You Get Part A

Author: Lora Drummond
Medicare Transition Specialist
Posted: 12/20/2021
50- 52 Solution Series – Advice -Stop your HSA when you get Part A
This is a reminder to help your employees manage their HSA contributions if they are thinking about enrolling in Medicare.
HSA’s are tax-free savings so that when retirement rolls around, you’ll have savings designated for medical expenses.
Contributions to HSA accounts must stop when an employee enrolls in Medicare.
Highlights To Help:
- To contribute to an HSA, you need to be enrolled in an HSA-qualified health plan with a high deductible.
- An (HSA) is an account you can use to pay for qualified medical expenses with pretax money.
- Employees who decide to enroll in Part A are not eligible to contribute to a tax-deferred account any longer.
- Employers must stop contributing to the employee’s HSA also.
- When to stop contributing? We recommend stopping six months before they plan to apply for Medicare.
- If they keep working and stay on their employer plan AND enroll in Medicare Part A because it’s free – contributing to the HSA must stop!
- They CAN use existing HSA funds to pay for some Medicare premium costs after enrolling in Medicare. Qualified healthcare costs can also still be paid from this account.
- Employees receive a tax penalty on any money they contribute to an HSA once they enroll in Medicare.
- If a person is already collecting Social Security upon turning age 65, he or she will be automatically enrolled in Medicare – therefore, cannot contribute to his or her HSA.
If an employee is on a creditable employee plan, we don’t recommend enrolling in Medicare too. Then they can keep contributing to the HSA and defer Medicare. We can help them evaluate when they should enroll and when they can safely defer their Medicare and stay on their employer plan.
For confident support, The Medicare Architects can partner with you to provide answers to employees turning 65 or retiring. Help them understand their options so they can make appropriate decisions and plan to avoid penalties later.
Our services are at no charge to you or your employees – We are here to help!
Need guidance on how to support your employees with other possible scenarios and helpful solutions?
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– Lora
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