How to Make HSA Contributions After Age 65

Having read your column about health savings accounts after Medicare, I understand that I can’t make new contributions to my HSA after I sign up for Medicare. But can I choose not to sign up for Medicare at 65 so I can continue to contribute to my HSA? I’ll be turning 65 later this year but plan to keep working for a few more years and have been very happy with my high-deductible health insurance plan and HSA at work.

You are right that you may be able to keep making HSA contributions after age 65 if you delay your Medicare enrollment, assuming your employer allows you to do so. To continue contributing, you must delay signing up for both Medicare Part A, which covers hospital treatment, and Part B, which covers outpatient treatment. As long as you continue to work and keep your employer coverage, you won’t have to pay the penalty that would otherwise apply for delaying your Medicare enrollment.

People who keep working after age 65 often delay enrolling in Medicare Part B, for which there is a premium, if they have coverage through their employer. But most sign up for Part A as soon as they turn 65 because it’s free. Delaying coverage altogether isn’t always an option. Companies with fewer than 20 employees can require you to enroll in Medicare when you turn 65 (Medicare then becomes the primary coverage, and the employer picks up many expenses that Medicare doesn’t cover). Also, if you’re already receiving Social Security benefits, you’re automatically enrolled in Part A when you turn 65, and you aren’t allowed to turn it down.

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Even if you are able to choose the HSA over Medicare, it may not be your best option. “You need to sit down and do a cost-benefit analysis,” says Elaine Wong Eakin, executive director of California Health Advocates. Among the considerations: the size of the insurance plan’s deductible and premium, the HSA tax deduction, any employer contribution to the account, and your expected out-of-pocket medical costs. After you’ve run those numbers, compare them to your Medicare premiums, any medigap costs and estimated uninsured expenses.