HSA and Medicare: Contribution Rules, Penalties and How to Avoid Them
Reviewed October 1, 2026. You can keep and spend money in a Health Savings Account (HSA) after you join Medicare, but you can’t put new money into it. Once you’re enrolled in any part of Medicare, including premium-free Part A, your HSA contribution limit drops to zero. Contributions made after that are “excess contributions,” which the IRS taxes at 6% for each year they stay in the account unless you withdraw them in time.
Quick answer: Stop HSA contributions, from you and your employer, before your Medicare starts. If you sign up for Medicare or Social Security after 65, stop 6 months earlier, because premium-free Part A can be backdated up to 6 months. After you have Medicare, you can still use your HSA tax-free for qualified medical expenses, including Part B, Part D and Medicare Advantage premiums, but not Medigap premiums.
Can you have an HSA and Medicare at the same time?
Yes and no. You can own an HSA and use its balance while on Medicare. You can’t contribute to one. IRS Publication 969 states: “Beginning with the first month you are enrolled in Medicare, your contribution limit is zero” (IRS). This applies to every part of Medicare. It doesn’t matter whether you have only Part A, Original Medicare or a Medicare Advantage plan.
Why Part A can catch you off guard
- Part A is automatic if you start Social Security or Railroad Retirement benefits at 65 or later. You can’t collect those benefits and decline Part A.
- Part A can be retroactive. If you enroll after you turn 65, premium-free Part A coverage generally goes back up to 6 months, but not earlier than the month you first became eligible.
- Retroactive months count. HSA contributions made for months your Medicare coverage reaches back into become excess contributions.
That’s why Medicare.gov advises: “If you have a Health Savings Account (HSA), you and your employer should stop contributing to your HSA 6 months before you retire or apply for benefits from Social Security (or the Railroad Retirement Board).” (Medicare.gov) Read more about backdating in when Medicare Part A is backdated 6 months.
What is the penalty for contributing to an HSA on Medicare?
| Situation | Tax result |
|---|---|
| Contributions after Medicare starts (including retroactive months) | Treated as excess contributions; 6% excise tax each year they remain in the account |
| Excess removed, with earnings, by your tax-filing deadline | No 6% tax; the earnings are taxable income |
| Using HSA money for qualified medical expenses after Medicare | Tax-free |
| Using HSA money for non-medical expenses at 65 or older | Ordinary income tax, but no additional penalty |
| Using HSA money for non-medical expenses before 65 | Income tax plus a 20% additional tax (exceptions for disability or death) |
Source: IRS Publication 969. If you’ve already over-contributed, contact your HSA custodian about removing the excess and talk to a tax professional before you file.
HSA contribution limits in your Medicare enrollment year
For 2026, the HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage (IRS Rev. Proc. 2025-19). People 55 and older can generally add a $1,000 catch-up contribution.
In the year your Medicare starts, the limit is prorated by the number of months you were eligible before Medicare. For example, if your Medicare coverage begins July 1, you were eligible for 6 months, so your limit is roughly half the annual amount, including any catch-up. If Part A is backdated, the months covered by Medicare don’t count as eligible months.
What about my spouse?
Your Medicare enrollment affects your own eligibility. A spouse who isn’t on Medicare and is covered by a qualifying high-deductible health plan may still be able to contribute to their own HSA. Family-coverage rules are detailed in IRS Publication 969, and a tax advisor can confirm your situation.
Using your HSA after you join Medicare
Your HSA balance stays yours. IRS Publication 969 lists these Medicare-related costs as qualified expenses you can pay tax-free from an HSA once you’re 65:
- Medicare Part A premiums (if you pay one)
- Medicare Part B premiums, $202.90 a month in 2026 for most people
- Medicare Part D premiums
- Medicare Advantage plan premiums
- Deductibles, copays and coinsurance for covered care
- Qualified long-term care insurance premiums, up to age-based limits
Not allowed: Medicare Supplement (Medigap) premiums aren’t a qualified HSA expense. If your income is high enough to trigger IRMAA, those higher Part B and Part D amounts are still premiums you can pay from your HSA. See 2026 Medicare costs and IRMAA.
Should you delay Medicare to keep contributing?
If you’re still working past 65 with coverage from an employer with 20 or more employees, you can usually delay Part A and Part B and keep contributing to your HSA, as long as you don’t start Social Security benefits. When you later lose that coverage, you get a Special Enrollment Period to sign up without a late penalty. Smaller employers often require Medicare at 65. Because the rules depend on your employer, compare the options in working past 65: Medicare, employer coverage, COBRA and HSA rules and can my employer pay my Medicare premiums?
HSA and Medicare checklist
- Pick your Medicare start date using our turning 65 Medicare checklist.
- Count back 6 months if you’ll enroll after 65 or start Social Security, and stop contributions then.
- Tell your employer to stop employer HSA contributions at the same time.
- Prorate your contribution limit for the year Medicare starts.
- Keep receipts for medical expenses and premiums you pay from the HSA.
Frequently asked questions
What is the penalty for having an HSA and Medicare?
There’s no penalty for having an HSA. The penalty applies to contributions made after your Medicare starts: a 6% excise tax on the excess for each year it stays in the account, unless you withdraw it and its earnings by your tax deadline.
Can I use my HSA to pay Medicare premiums?
Yes, for Part A, Part B, Part D and Medicare Advantage premiums once you’re 65. You can’t use it tax-free for Medigap premiums.
When should I stop contributing to my HSA before Medicare?
Before your Medicare coverage starts. If you’ll apply for Medicare or Social Security after 65, Medicare.gov recommends stopping 6 months before you apply.
Can I contribute to an HSA if I only have Medicare Part A?
No. Enrollment in any part of Medicare, including Part A alone, makes your HSA contribution limit zero.
Can I keep my HSA after I enroll in Medicare?
Yes. The account and its balance remain yours, and you can keep using it for qualified medical expenses for life.
This article is general information, not tax, legal or individual insurance advice. Medicare365 is not affiliated with or endorsed by the U.S. government, the IRS or the federal Medicare program.