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ASK KIM

Health Savings Account Rules for Retirees

You can't contribute to an account, but you still can use the money.

My wife and I turn 65 this year and will sign up for Medicare. Will we still be able to use the money in our health savings account?

You sure can. Even though you can't contribute to an HSA after you sign up for Medicare, you can keep the account and use the money tax-free for medical expenses. In fact, you can use the money in the HSA for anything after age 65, although you will owe taxes on any withdrawals you make for nonmedical expenses.

There are plenty of medical expenses to which you can apply the money. For example, you can tap the account for Medicare deductibles and co-payments. You may also be able to use HSA money to cover premiums for Medicare parts A, B and D (prescription-drug coverage), and to pay Medicare Advantage plan premiums. You may also use HSA money to help pay qualified long-term-care premiums. However, you can't use HSA money tax-free to pay medigap premiums.

For more information about health savings accounts, see Health Savings Account Answers. For more information about your health-insurance options after age 65, see Your Medicare Owner's Manual.

Got a question? Ask Kim at askkim@kiplinger.com.