What you need to know
It's important to understand that Medicare enrollment affects your eligibility to contribute to an HSA. If you are enrolled in the Consumer Choice Plan and Medicare Part A and/or B, or thinking about it, be aware that:
Once you enroll in Medicare, you're no longer eligible to contribute to your HSA.
A tax penalty will be imposed on any contributions made to your HSA after you enrolled in Medicare.
The month Medicare coverage begins, change your HSA contribution to zero dollars to avoid a tax penalty. Keep in mind that after you enroll in Medicare, you may continue to withdraw money tax-free from your HSA to help pay for qualified medical expenses such as deductibles, premiums, copayments, and coinsurance.
Delay enrolling in Medicare if you want to continue contributing pre-tax to your HSA. You will also need to delay collecting Social Security retirement benefits to avoid automatic enrollment in Medicare Part A and B.
Stop contributing to your HSA at least six months before you apply for Medicare Part A to avoid a tax penalty. You can enroll in Part A any time after you’re first eligible for Medicare. You will be retroactively enrolled in Medicare Part A for the preceding six months. Therefore, if you do not stop HSA contributions at least six months before Medicare enrollment, you may incur a tax penalty*.
*For questions about taxes, please consult a tax professional.