DETERMINE ELIGIBILITY

All About HSAs

HSAs are like “medical” IRAs. They are tax-free accounts that individuals with an HSA – compatible, high deductible health insurance policy can fund and use to pay for medical expenses. Because they are tax-advantaged and balances can accumulate over time, HSAs can also be used to accumulate savings.

To be eligible for an HSA, the accountholder must be covered only by an HSA-compatible, high deductible health plan and must not be a dependent on another person’s tax return. Individuals age 65 and older are eligible to open an HSA as long as they have not elected Medicare Parts A, B, C or D. An HSA accountholder cannot have access to a general purpose healthcare FSA or HRA through their employer or their spouse’s employer, unless the plans are “stacked.”

In 2023, a high-deductible health insurance plan is one with an annual deductible of at least $1,500 for individuals and $3,000 for families.

HSAs and Medicare

YOUR HSA KEEPS WORKING AFTER YOU RETIRE

Retirees cannot contribute to HSAs after enrolling in Medicare – but they can still retain and use the funds in HSAs they previously established. If you don’t use the money in your HSA, you retain it. HSAs are also portable – meaning that when you change jobs or health insurers, you bring your HSA with you – even when you enroll in Medicare.

HSAS COVER YOUR GAPS

Original Medicare does not cover everything. Many of the gaps left by Medicare are considered qualifying medical expenses under an HSA. These may include:

• Long-term care services
• Long-term care insurance
• Dental care
• Vision care
• Hearing aids

YOU MAY BE ABLE TO DELAY MEDICARE TO MAXIMIZE YOUR HSA CONTRIBUTIONS

Late enrollment in Medicare can result in hefty penalties. However, if you receive qualifying health insurance through an employer, you may be able to delay Medicare enrollment and Social Security benefits without a penalty, allowing you to continue contributing to your HSA.

Contact Sterling today to learn more about HSAs.