5 THINGS TO KNOW ABOUT HSAs AT AGE 65

October 19, 2026

Monday, October 19, 2026 

By Sarah Brenner, JD Director of Retirement Education 

The unfortunate reality for many Americans is that medical expenses will be a large part of their expected budget in retirement years. Health Savings Accounts (HSA), which continue to grow both in numbers and in balance size, can help. We receive many questions about HSAs for individuals who are age 65 or older. Here is what you need to know about your HSA as you reach your retirement years.

1. You can use your HSA to pay most Medicare premiums.

Generally, insurance premiums are not considered qualified medical expenses. However, after age 65 and enrollment in Medicare, certain insurance premiums can be paid tax-free with HSA distributions. You can pay for all Medicare premiums (including IRMAA), except for Medigap.

2. You can take penalty-free distributions.

If a distribution is taken from an HSA and the funds are not used for qualified medical expenses, the distribution is taxable and a 20% penalty applies. However, there is good news if you are age 65 or older. Distributions that you take from your HSA after age 65 are never subject to penalty. What you use the funds for does not matter. All HSA distributions after age 65 are penalty-free, even if the funds are not used for qualified health expenses. (If not used for qualified expenses, they still will be taxable.)

You can make prorated contributions.

When it comes to making contributions to an HSA when you reach age 65, things can get a little tricky. This is due to the complicated interaction of the HSA rules with Medicare. To be eligible to contribute to an HSA, you must have a High Deductible Health Plan (HDHP). You cannot have coverage under another plan that is not an HDHP. Because Medicare is not an HDHP, you cannot contribute to your HSA if you are enrolled in Medicare. Enrollment in any Medicare coverage (Parts A, B, C, D, or Medigap) will end HSA eligibility.

You lose your eligibility to make an HSA contribution as of the first day of the month you reach age 65 and enroll in Medicare. You can make a prorated contribution for the year to your HSA for the months before you became ineligible due to your enrollment in Medicare. This contribution can be made until the HSA contribution deadline, which is generally April 15 of the following year.

3. You must understand the interaction between Social Security and your HSA.

Social Security can add another wrinkle. This is because if you claim Social Security at age 65 or later, you also will automatically be enrolled in Medicare Part A. This would mean that you are no longer eligible to contribute to an HSA because you no longer have an HDHP. The bottom line is if you are over 65, you cannot be both receiving Social Security and contributing to your HSA.

Things get even more complicated for those workers who decide to delay receiving Social Security benefits. If you claim Social Security and therefore enroll in Medicare Part A after reaching age 65, your enrollment will be backdated by six months. However, it cannot be backdated past age 65. Because Medicare enrollment makes you ineligible for HSA contributions, you must exclude those retroactive months from HSA contribution eligibility.

4. You may be able to continue to make HSA contributions after age 65.

Are you delaying retirement after age 65 and still working? If you do not claim Social Security and you have an HSA, can you still contribute? Well, it depends on whether you are enrolled in Medicare. You may decide to opt out of Medicare and receive healthcare coverage through a large employer’s HDHP. In that case, you can continue to contribute to your HSA.

 Copyright © 2026, Ed Slott and Company, LLC Reprinted from The Slott Report, [October 19, 2026], with permission[https://irahelp.com/5-things-to-know-about-hsas-at-age-65/] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

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