Lynn Brenner Lynn Brenner

Brenner answers questions about all aspects of family finance.

In February, I turned 66. I'm self-employed in a business with two partners. The partnership provides our medical insurance in a small business-high deductible group plan that permits us to have HSAs (Health Savings Accounts). I just applied for Social Security, although I'll keep working. I was told I must enroll in Medicare Part A to receive retirement benefits. If I do that, I can't contribute to my HSA. Must I enroll in Part A to receive Social Security even though I have a group health plan?


Yes. And that's not all. Notwithstanding your group plan, you'll probably have to sign up for Medicare Part B, too.

People 65 and older must enroll in Medicare Part A (hospital coverage) to receive Social Security retirement benefits. There is no charge for Part A. But people who are covered by Medicare can't contribute to an HSA -- a tax-sheltered savings account only available to people who have a high deductible health insurance policy. (In fact, to avoid a tax penalty, you should stop your HSA contributions six months before starting Social Security because Medicare Part A coverage is six months retroactive.) HSA withdrawals after you enroll in Medicare are tax-free if you use them to pay for qualified medical expenses.

You don't need to enroll in Medicare Part B (physician services) to collect Social Security. But when your employer has fewer than 20 workers, Medicare becomes your primary health insurance at 65. Typically, employer-provided coverage becomes secondary insurance at that point -- which means it stops paying bills that would be covered by Medicare. If you're not enrolled in Part B when that happens, you'll have no primary health insurance.

The bottom line If you'll still be working at 65, it's extremely important to double-check how your workplace health insurance plan coordinates with Medicare.

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