Navigating the intersection of Health Savings Accounts (HSAs) and Medicare can be confusing, especially when one spouse is still working and the other is ready to retire. A common question we hear from Medicare-eligible adults is:
“If I have an HSA and make a family contribution, but my spouse enrolls in Medicare, is there a conflict?”
The short answer is yes, there is an impact on your spouse’s eligibility – but it does not prevent you from contributing.
The Core Rule: You Can Still Contribute
Let’s clear up the biggest misconception. If you are the employee and you are not enrolled in Medicare, your spouse’s Medicare enrollment does not disqualify you from contributing to an HSA. As long as you remain an “eligible individual” (covered by a qualified high-deductible health plan and not enrolled in Medicare), you can continue funding your HSA normally.
The “Family Limit” Myth
A common misunderstanding is that once your spouse enrolls in Medicare, you must switch to the “individual” HSA contribution limit. This is not correct.
According to IRS rules, the contribution limit is based on the type of HDHP you carry:
- If you have family HDHP coverage, you may contribute the full family limit – even if your spouse is also enrolled in Medicare at the same time.
- Your spouse, however, is no longer an “eligible individual” once they enroll in Medicare. They cannot contribute to their own HSA going forward.
All family contributions simply go into your HSA.
Spending Your Funds: Important Medicare Premium Rules
One area where people get tripped up is using HSA money to pay Medicare premiums.
Here’s the correct rule:
- You can use your HSA to pay qualified medical expenses for your spouse, tax-free.
- Medicare premiums for Parts A, B, C (Medicare Advantage), and D are considered qualified medical expenses.
- This is true regardless of your age.
You cannot pay for any Medicare Supplement plan monthly premiums with HSA funds. It doesn’t make sense but Medicare rules often don’t!
Watch Out for Excess Contributions
While you may still contribute up to the family limit, you need to be careful about timing:
- Your spouse must stop contributing to their own HSA the month their Medicare enrollment begins (including any retroactive Medicare coverage).
- The total combined contributions for the year cannot exceed the family limit, even if you each had separate HSAs earlier in the year.
- If you accidentally over-contribute due to mid-year eligibility changes, the extra amount becomes an excess contribution, which must be removed (with earnings) to avoid the IRS 6% excise tax.
Summary Checklist
- Can I contribute? Yes – if you are not on Medicare and remain HSA-eligible.
- Which limit applies? The family limit, as long as you have family HDHP coverage.
- Can I pay for my spouse’s Medicare premiums? Yes – Parts A, B, C, and D are all HSA-eligible.
- What about penalties? Avoid excess contributions, especially if your spouse’s Medicare eligibility starts mid-year.
- You cannot pay for any Medicare Supplement plan monthly premiums with HSA funds.
Want help with your Medicare? Please schedule an appointment with The Medicare Family. We’ll walk you through the plans, prices, and answer any questions you have about your unique situation.
