For many people, turning 65 marks both the beginning of retirement and the start of Medicare eligibility. However, those working past age 65 for a large employer who participate in a High Deductible Health Plan (HDHP) can delay Medicare enrollment and Social Security benefits, allowing them to continue saving into a Health Savings Account (HSA) until retirement.
Enrolling in Medicare (Parts A or B), or starting your Social Security benefits (which automatically enrolls you in Medicare Part A) ends your eligibility to fund an HSA. However, individuals aged 65 and older who remain covered by a qualified employer-sponsored HDHP may be able to continue contributing to their HSA. Generally, if your employer-sponsored plan covers 20 or more employees, you can delay enrollment in Medicare. And by doing so, you may continue making tax-advantaged contributions to your HSA.
One important caveat is that Medicare Part A coverage can be applied retroactively for up to six months when enrolling after age 65. As such, it is important to plan to stop HSA contributions at least 6 months before enrolling in Medicare Part A or beginning Social Security benefits.
If you anticipate working beyond 65, coordinating the various decisions regarding insurance and benefits can be daunting. But careful planning can help you maximize HSA contributions, avoid unnecessary Medicare premiums and penalties, and maximize your future Social Security income.
