Ask the Expert: Medicare and HSAs

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.