Ask the Expert: Medicare and HSAs
If you'll still be working at 65, it's extremely important to double-check how your workplace health insurance plan coordinates with Medicare. Credit: iStock
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.
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