Health savings accounts (HSAs) can be a useful savings tool for people with high-deductible health plans. But once you’ve enrolled in Medicare, you can no longer contribute to an HSA. This can get tricky, so it’s helpful to understand how it works.
HSAs are tax-advantaged accounts that let you save pretax money for medical expenses. You can use your HSA to pay for costs like doctor’s visits, dental care, vision exams, over-the-counter medicine and prescription drugs.
To save to an HSA, you must have a high-deductible health plan (HDHP).
IRS guidelines for HDHPs
Here are the IRS guidelines for what's considered an HDHP in 2026 and 2027:
Individual | Family | |
|---|---|---|
Minimum annual deductible | $1,700 in 2026 ($1,750 in 2027). | $3,400 in 2026 ($3,500 in 2027). |
Maximum out-of-pocket cap | $8,500 in 2026 ($8,700 in 2027). | $17,000 in 2026 ($17,400 in 2027). |
You can use your HSA, but you can’t contribute to it
If you established an HSA before you enrolled in Medicare, you can still use the funds from the account. But in order to save to an HSA, you must be enrolled in an HSA-eligible health plan and you can’t be covered by other insurance, such as Medicare. This means you can’t contribute to an HSA (or establish an account if you don’t have one) once you’re enrolled in Medicare.
Six-month look-back period for late enrollees
If you sign up for Medicare after age 65, your coverage is backdated up to six months (but no earlier than the month you turned 65). You can’t contribute to an HSA during these covered months. To avoid penalties, you should stop saving to your HSA six months before you enroll in Medicare.
Once you're 65 or older, you can use your HSA to pay Medicare Part A, B, C and D premiums. But you can’t pay for Medicare Supplement Insurance, or Medigap, premiums with an HSA. You can also use HSA money to pay premiums for employer-sponsored health care.
Turning 65 means you can start taking distributions from your HSA for nonmedical expenses without paying a penalty. However, you’ll still pay income taxes on the money. For maximum tax savings, use HSA money for qualified medical costs only.
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Penalties for saving to an HSA on Medicare
There’s no penalty for having an already established HSA when you’re enrolled in Medicare, although you can no longer set up a new HSA. However, if you save to an HSA while you’re enrolled in Medicare, you may be hit with IRS penalties on what are considered “excess contributions,” including a 6% excise tax charge.
This applies to the six-month look-back period for HSA contributions when you sign up for Medicare past age 65. If you’ve delayed signing up for Medicare, Medicare coverage is retroactive for the six months before you enroll, not including any months before your 65th birthday month. If you’ve made HSA contributions during any of the look-back months, including your birthday month, you’ll owe tax penalties.
If you’ve saved to your HSA during look-back months, you can often contact your HSA administrator and reverse overcontributions. It’s best to do this before you file income taxes for that year.
You might be able to delay Medicare and keep saving to an HSA — but should you?
You can delay enrolling in Medicare and continue contributing to an HSA, but it’s not always worth the risk.
Don’t delay Medicare if:
You don't have active employer coverage. You’ll face permanent late enrollment penalties and risk gaps in coverage. COBRA and retiree health insurance from a previous job don’t count as current employer coverage.
Your work has fewer than 20 employees. Health coverage from a small business might not qualify as primary coverage. Delaying Medicare could result in coverage gaps and late penalties.
You want to claim Social Security. Receiving Social Security automatically enrolls you in Medicare Part A.
You can delay Medicare if:
You have qualifying coverage through an employer. If you have current health coverage through an employer (or spouse’s employer) with 20 or more employees, you can delay signing up for Medicare Part A and Part B. This lets you save money on Medicare premiums and continue maxing out your HSA's tax advantages.
You talked to HR first. Check with your benefits coordinator before delaying Medicare. Some employer health plans require you to enroll in Medicare.
Once you have lost employer coverage or stopped working, you’ll have eight months to sign up for Medicare before you’ll face penalties. To prevent coverage gaps, sign up a month before you stop working or lose your insurance. And if you delay Medicare past age 65, stop all HSA contributions six months before you enroll to avoid tax penalties.
If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).
