Daniel Stewart

What Happens to My HSA When I Enroll in Medicare?

A health savings account (HSA) is a pre-tax solution for individuals who want to set money aside specifically for healthcare expenses. Health savings account companies don't provide health insurance, but instead, they offer a financial vehicle by which you can save money to be spent on things that your health insurance doesn't cover. To find the best health savings account companies, visit this website.

Many people turn to health savings account companies to set up tax-advantaged accounts to pay for dental care, psychiatric care and other types of care that traditional health insurance sometimes doesn't cover. This, of course, varies from state to state and insurance plan to insurance plan, but regardless of your insurance coverage benefits, an HSA can be a smart backup plan to cover emergencies.

How Does Medicare Affect an HSA?

In order to qualify for an HSA, you usually need to be enrolled in an insurance plan with a high deductible. The point of the HSA is to help offset the larger out-of-pocket costs associated with these types of plans. The benefit here is that funds contributed to your HSA are tax-free dollars, so you have the chance to get the most out of them.

Another part of qualifying for an HSA is that you can't have an additional health insurance plan. Since Medicare is health insurance that is provided by and regulated by the government, Medicare recipients aren't able to contribute to an HSA without incurring a penalty. The rules change if you're on a spouse's plan through their employer, and existing HSA funds should not be impacted by enrolling in Medicare.

Each Situation is Unique

Although the above information applies to many people who are enrolled in Medicare, every person's situation is unique. As a result, you're encouraged to contact the Centers for Medicare and Medicare Services (CMS) to discuss your unique needs.

Likewise, your private insurance provider should be able to offer you guidance related to your options for setting up and maintaining an HSA. Different states have different rules that govern Medicare and HSA management, so what applies in one state may not apply in another.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at savings guide blog.