Do you have a Health Savings Account (HSA)? If so, you’ve got one of the most tax-advantaged accounts available! HSAs offer a triple tax benefit that’s hard to beat:
- Pre-tax contributions are tax-deductible.
- Tax-free growth on invested funds (similar to an IRA).
- Tax-free withdrawals for qualified medical expenses.
However, there’s one drawback: once you enroll in Medicare (typically at age 65), you’re no longer eligible to make HSA contributions. But here’s some good news—if you love the benefits of an HSA, there’s a way to keep contributing until you’re nearly 70, allowing you to potentially add over $42,725 in after-age-65 contributions.
Continuing HSA Contributions After Age 65
To continue contributing to your HSA past 65, you must meet these three requirements:
- Coverage under a high-deductible health plan (HDHP) provided by an employer, either yours or your spouse’s.
- No other health coverage outside of this HDHP.
- Not enrolled in Medicare.
Additionally, your HDHP must be part of a large employer plan with at least 20 employees. If you’re self-employed or working for a small employer, this option won’t apply—unless you’re covered by your spouse’s qualifying large employer plan.
Avoiding Medicare Enrollment to Maintain HSA Eligibility
To keep contributing, you’ll need to delay enrolling in Medicare. Here’s what to consider:
- Delay Social Security Benefits: When you apply for Social Security, you’re automatically enrolled in Medicare, which would end your HSA eligibility. By delaying Social Security until you turn 70, you can continue making HSA contributions and boost the benefits you’ll receive when you do start collecting Social Security.
- Plan to Stop Six Months Before You Turn 70: Social Security benefits start six months retroactively from your application date. So, to avoid any issues, you’ll need to stop HSA contributions six months before you begin Social Security.
By following these steps, you can continue making HSA contributions for up to four and a half years after you turn 65, depending on inflation-adjusted contribution limits. This could add up to more than $42,725—a substantial benefit for your healthcare savings.
Interested in This HSA Strategy?
If you’d like to discuss these in more detail, feel free to reach out to me directly at 812-827-2697 or team@elitetaxstrategysolutions.com.
David P. Fritch
Attorney at Law/CPA
Fritch Law Office
Elite Tax Strategy Solutions
Author and Founder of Badass Lawyer Blueprint
The information contained herein is time sensitive and not intended to be, and does not constitute, Legal, Tax, Accounting, or Investment advice. Recipients should contact their applicable professional advisors prior to acting on the information set forth herein.
We appreciate your trust and business and the referrals you have given us over the years.