Medicare

How Your HSA Can Reimburse You for Medicare Premiums Paid

Even if your Medicare premiums are automatically deducted from your Social Security check, you can take tax-free withdrawals from a health savings account to reimburse yourself for them.

Question: You told another reader that people can’t make new contributions to a health savings account once they enroll in Medicare, but they can withdraw the money tax-free from the account to pay Medicare premiums. If I have my Medicare payments deducted directly from my Social Security benefits, can I still withdraw money from my HSA for those expenses? And do I need to withdraw the money right away, or can I keep the money growing in the HSA and withdraw it for those premiums sometime in the future?

Answer: Even though you have your Medicare premiums paid directly out of your Social Security benefits, you can withdraw money tax-free from your HSA to reimburse yourself for those expenses. After you turn 65, you can use HSA money tax-free to pay premiums for Medicare parts B and D and Medicare Advantage plans (but not premiums for Medicare supplement policies), in addition to paying for other out-of-pocket medical expenses.

And there’s no time limit for withdrawing money from an HSA to pay for those expenses. You can keep the money growing tax-deferred in the account, then withdraw it tax-free at any time in the future to reimburse yourself for any eligible expenses you have incurred since you opened the HSA. So if you’ve had an HSA for several years and didn’t realize you could withdraw money tax-free for Medicare premiums, you could reimburse yourself for all of those premiums at any time. You just need to keep receipts showing that you paid for eligible expenses. And you can’t withdraw money for expenses you incurred before you opened up the HSA. “When reimbursing himself from the HSA, it’s important that he maintains proof of payment and documentation that the expenses were eligible, in the event of an audit (although he does not need to submit any receipts to be reimbursed),” says Begonya Klumb, head of HSAs for Fidelity Health Care Group.

For more information about HSA-eligible expenses, see IRS Publication 969, Health Savings Accounts. Also see 10 Myths About Health Savings Accounts for more information about how these accounts work.

Most Popular

Senate Passes $3,000 Child Tax Credit for 2021
Coronavirus and Your Money

Senate Passes $3,000 Child Tax Credit for 2021

The provision would temporarily increase the child tax credit to $3,000 or $3,600 per child for most families and have 50% of it paid in advance by th…
March 6, 2021
Senate Passes Bill with More "Targeted" Stimulus Payments
Coronavirus and Your Money

Senate Passes Bill with More "Targeted" Stimulus Payments

The Senate finally passes the $1.9 trillion COVID-relief bill. But fewer people will get a third stimulus check under the Senate version than under th…
March 6, 2021
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021

Recommended

A Retiree’s Guide to Key Dates in 2021
Basics

A Retiree’s Guide to Key Dates in 2021

It's critical -- and financially sound -- to hit these important financial deadlines spaced throughout the year.
January 8, 2021
What You'll Pay for Medicare in 2021
Healthy Living on a Budget

What You'll Pay for Medicare in 2021

For Medicare premiums 2021, look for modest increases in premiums and out-of-pocket costs.
December 16, 2020
Medicare Mania: Some Basics to Know During Open Enrollment
Medicare

Medicare Mania: Some Basics to Know During Open Enrollment

What’s Part A, Part B, Part C and Part D and what do they cover? What are Medicare Advantage plans? And how about the deadlines involved? There’s a lo…
November 21, 2020
Early Retirement Means Finding Health Insurance Before Medicare
Making Your Money Last

Early Retirement Means Finding Health Insurance Before Medicare

Cover the gap with health insurance before you're eligible for Medicare enrollment.
November 20, 2020