HSA

Q&A: Can I use health savings account to pay Medicare premiums?

February 17, 2026 By Liz Weston

Dear Liz: I’m 65. Can I use a health savings account to pay my Medicare premiums? I do not collect Social Security yet.

Answer: If you already have an HSA, then yes, you can make tax-free withdrawals from it to pay your Medicare premiums. Once you enroll in Medicare, though, you won’t be able to make further contributions to an HSA.

HSAs allow people with high-deductible health insurance plans to save money for current or future medical costs. These accounts offer a rare triple tax advantage: contributions are deductible, the funds grow tax deferred and withdrawals are tax free if the account owner has incurred eligible expenses. Since the funds can be invested and the balance rolled over from year to year, many HSA owners treat these accounts as a supplemental way to save for retirement.

It’s important, though, that the account owner ultimately uses these funds. Although a spouse can inherit an HSA and treat it as their own, any other beneficiary would face income taxes on the balance.

Once you’re 65, you can withdraw HSA money for any reason and not face penalties, but you will be taxed on the withdrawals if they don’t meet the rules for qualified medical expenses.

For example, you can take tax-free withdrawals to pay premiums for the various parts of Medicare: Part A (hospital coverage, which is free for most people), Part B (doctor’s visits), Part C (Medicare Advantage), and Part D (prescription drug coverage). The premium for a Medicare supplemental policy, though, isn’t considered to be a qualified medical expense, so you’d owe taxes on any withdrawal for that.

Premiums for other health insurance policies typically don’t qualify for tax-free withdrawals, with a few exceptions, such as paying for COBRA continuation coverage.

Keep in mind that you can use previous years’ medical expenses to justify a tax-free withdrawal, as long as the unreimbursed expense occurred after opening your HSA. You’ll want to keep receipts and other records showing that the expenses qualified and you haven’t been reimbursed (through an insurance claim, for example).

Q&A: Mistaken HSA withdrawal is fixable until April 15

October 13, 2025 By Liz Weston

Dear Liz: I need some help understanding health savings account distribution rules. I was injured and bought medical supplies with my credit card, then reimbursed myself from my HSA. When I didn’t need the supplies, I returned them for a refund. What now? It seems like the money should go back to the HSA, but it’s not clear how to do that. Are there tax implications for a non-qualified HSA withdrawal made in good faith?

Answer: You typically have until April 15 of the following year to return funds mistakenly withdrawn from a health savings account. Otherwise, the withdrawal would incur income taxes and a 20% federal penalty.

Mistakes aren’t uncommon. Contact your HSA custodian, which likely has a procedure to get the money back into your account.

Q&A: What can retirees do to deduct medical expenses?

August 5, 2025 By Liz Weston

Dear Liz: My wife and I, both in our early 90s, are fortunate to have good health insurance. However, we have significant expenses that are not covered. As you might expect, we are retired and receive income from Social Security, pensions, annuities and investments. Are we eligible to use flexible health accounts funded with pretax dollars? If so, what’s the best way to set that up and how would we pay those uncovered health bills?

Answer: Unfortunately, you don’t have access to pretax accounts that could help you pay medical bills.

Flexible spending accounts are offered by employers, and contributions are limited annually (in 2025, the limit is $3,300). Health savings accounts have higher limits but require you to have a qualifying high-deductible health insurance plan. Once you’re on Medicare, as you two presumably are, you are no longer allowed to contribute to an HSA.

You might be able to deduct medical expenses that exceed 7.5% of your adjusted gross income. To claim the deduction, you would need to have enough itemized expenses to exceed the standard deduction, which in 2025 is $34,700 for a married couple filing jointly who are 65 and older. (The standard deduction for a married couple filing jointly is $31,500, while people 65 and older get an additional deduction of $1,600 each.)

There’s also a new, temporary $6,000 deduction for people 65 and older that is available whether you itemize or take the standard deduction. This bonus deduction begins to phase out for adjusted gross income above $150,000 for married couples filing jointly and disappears at AGIs above $250,000. This deduction is set to expire after the 2028 tax year.

Q&A: Confusion about spending HSA money after 65

March 3, 2025 By Liz Weston

Dear Liz: I’ve read that after age 65, health savings account money can be spent on anything. Your recent column said it could be spent only on medical expenses. Which is true?

Answer: At age 65, there is no longer a penalty if you spend HSA money on something other than qualifying medical expenses. Those withdrawals will be subject to income tax, however, so you’d be losing one of your HSA’s three tax breaks (deductions on contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses).

You don’t have to have incurred the medical expenses in the same year you spend the money for the withdrawals to be tax-free, however. Savvy HSA owners keep records of any out-of-pocket medical expenses that weren’t reimbursed by insurance, flexible savings accounts or other means. As long as the unreimbursed expenses were incurred after the HSA was established, they can be used to justify tax-free withdrawals years or even decades in the future.

Q&A: Tapping into a Health Savings Account while on Medicare

February 18, 2025 By Liz Weston

Dear Liz: I’m on Medicare but I also have a health savings account with a fair market value of over $9,000. Am I able to spend this on prescriptions, eye care, etc.? I hate to waste this money. My wife passed away and it’s been sitting there for a while.

Answer: You can’t contribute to an HSA once you’re on Medicare, but you can certainly spend the money you’ve accumulated.

As mentioned in previous columns, HSAs offer a triple tax break in that contributions are deductible, the account grows tax-deferred and withdrawals are tax-free for qualifying medical expenses. Those expenses can include dental and vision costs as well as Medicare premiums.

If anyone other than a spouse inherits the account, the HSA becomes taxable so you’ll definitely want to spend that money while you can.

Q&A: Health savings accounts offer a rare triple tax break. Here’s what to know

January 7, 2025 By Liz Weston

Dear Liz: Can I contribute additional money to my health savings account, above the amount I’m contributing through payroll deduction? Also, I have an HSA account from a previous employer and one from my current employer. Can I combine the two?

Answer: If you have a qualifying high-deductible health insurance plan, you can contribute up to $4,300 this year to an HSA if the plan covers just you or $8,550 if the plan covers your family. If you’re 55 or older, you can contribute an additional $1,000. You can make additional contributions if your payroll deductions for the year, plus any employer contributions, fall short of the limit.

Maximizing your contributions can make sense because HSAs offer a rare triple federal tax break. Contributions are pre-tax, the money grows tax deferred and qualifying medical expenses can be paid with tax-free withdrawals. You can invest the money in your HSA for growth, and the balance can be rolled over year after year, making it a powerful potential supplement to other retirement plans. Although HSAs can be used any time to pay for medical costs, many HSA owners pay those expenses out of pocket so their accounts can continue to grow.

Consolidating an old HSA into your current one can be a smart move because combining accounts can reduce account fees and make it easier to manage your investments. You’ll also run less risk of losing track of an account.

The best way to consolidate would be to contact your current HSA provider and ask them to facilitate a direct trustee-to-trustee transfer from the old account. However, not all providers allow “in kind” transfers of investments. It should be no problem to transfer any cash in the account, but you may be required to sell the investments. You won’t owe federal tax on such a sale, but some states, including California, will tax any capital gains that result.