Medicare, Social Security and Your Health Savings Account

Continue to contribute to an HSA after you sign up for Medicare Part A and you will face tax penalties.

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I didn't sign up for Medicare at 65 because I'm still working and wanted to contribute to my health savings account. I plan to apply for Social Security at 66. Can I still refuse Part A and contribute to my HSA? --W.S., Cleveland

No. Even though you may be able to delay signing up for Part A after age 65 if you're working (your employer usually must have 20 or more employees), you cannot decline Part A after you sign up for Social Security. Once you're enrolled in Part A, you'll have to stop making HSA contributions -- or face a penalty for excess contributions. If you don't take Medicare Part A when you first qualify (generally when you turn 65), you should stop contributions to your HSA at least six months before you sign up for Social Security because your Part A benefits will be retroactive for up to six months if you were 65 or older during that time.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.