Medicare 2026

Medicare and Health Savings Accounts: The Contribution Rule to Know

If you have been saving in a Health Savings Account (HSA) through work, Medicare changes the rules in a way that catches many people off guard. The short version: once you are enrolled in any part of Medicare, you can no longer put new money into an HSA. The account does not disappear, and you can keep spending what is already in it on qualified medical expenses. But fresh contributions have to stop. Here is what that means in practice, and how to time things so you do not run into a tax problem.

The core rule

HSAs are designed for people covered by a qualifying high-deductible health plan and no other disqualifying coverage. Medicare counts as other coverage. So the moment any part of Medicare takes effect for you — Part A, Part B, Part C (Medicare Advantage), or Part D — you lose eligibility to contribute. This is true even if you only have premium-free Part A and are still working and still covered by your employer's high-deductible plan. The coverage you have at work can continue; the HSA contributions cannot.

Your employer's payroll contributions, your own contributions, and any contribution your spouse makes to your HSA all have to stop. Contributions made after your Medicare start date can trigger tax penalties, so it is worth getting the timing right the first time.

The six-month lookback

Here is the piece that trips people up. When you apply for Medicare after age 65, Part A coverage can be made retroactive up to six months — but never earlier than the month you turned 65. So if you delay signing up and then enroll at, say, age 67, your Part A start date will typically be backdated six months.

That backdated start date is also the date your HSA eligibility ends. Any contributions you made in those six months would be considered excess contributions. To avoid that, people who plan to keep contributing to an HSA past 65 often stop their contributions six months before the month they plan to apply for Medicare. If you are not sure exactly when you will apply, erring on the side of stopping earlier is the safer play.

Social Security and Part A are a package deal

If you start Social Security retirement benefits at or after 65, you are automatically enrolled in Part A. You cannot keep Social Security and refuse Part A. For HSA savers who want to keep contributing, this means delaying Social Security is often part of the plan — because the day Part A kicks in, contributions have to stop.

If you are already receiving Social Security when you turn 65, Part A will begin the month you turn 65, and your HSA contributions need to end by then.

What you can still do with the money

Losing the ability to contribute is not the same as losing the account. Money already in your HSA stays there and keeps its tax advantages. You can use it, tax-free, for a long list of qualified medical expenses. For people on Medicare, that specifically includes:

• Part B premiums
• Part D premiums
• Medicare Advantage (Part C) premiums
• Deductibles, copays, and coinsurance under Medicare
• Many other out-of-pocket medical, dental, and vision costs

One important exception: Medigap (Medicare Supplement) premiums are not a qualified HSA expense. You can own a Medigap policy and pay for it out of pocket, but not from your HSA.

After 65, you can also use HSA funds for non-medical expenses without the 20 percent penalty that applies at younger ages, though the withdrawal will be taxed as ordinary income — essentially like a traditional IRA at that point.

A quick word on 2027 Part D

Since many readers thinking about Medicare are also thinking about drug coverage, a few program facts worth noting for 2027: the Part D out-of-pocket cap will be $2,400 (up from $2,100 in 2026), the maximum deductible any Part D plan may charge is $700, and the national base beneficiary premium used in the late-enrollment penalty calculation is $41.33. Individual plan premiums are set plan by plan and vary. Annual Enrollment runs October 15 through December 7, 2026, with changes effective January 1, 2027. The Social Security Administration has announced a 3.6 percent cost-of-living adjustment for benefits payable beginning January 2027.

The 2027 Part B standard premium and deductible, along with the IRMAA income-related surcharge brackets, had not been announced as of this writing. CMS typically releases them in the fall. Check Medicare.gov for the official figures.

If you have Medicaid or Extra Help

People with full Medicaid or the Extra Help low-income subsidy have a monthly Special Enrollment Period to move to Original Medicare with a stand-alone Part D plan, or to switch stand-alone Part D plans. Full-benefit dual-eligible individuals can also join an integrated Dual Eligible Special Needs Plan (D-SNP) in any month. These flexibilities give lower-income beneficiaries more freedom to adjust coverage as their circumstances change.

Coverage choices: a neutral note

When you do move to Medicare, you will face a choice between Original Medicare (often paired with a stand-alone Part D plan and sometimes a Medigap policy) and Medicare Advantage. Original Medicare offers broad provider access nationwide and lets you add a Medigap policy for predictable cost-sharing, but Medigap premiums cannot be paid from an HSA. Medicare Advantage plans bundle hospital, medical, and usually drug coverage, often with extra benefits, but typically use provider networks and have plan-specific rules. Neither is "better" in the abstract — the right fit depends on your doctors, prescriptions, travel patterns, and budget.

Where to go next

For official, current information on Medicare eligibility, enrollment windows, and how coverage choices work, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048, 24 hours a day, 7 days a week. For HSA-specific tax questions, a tax professional can help you confirm your contribution cutoff date and handle any corrections if needed.