Health Savings Accounts After Medicare

I am about to turn 65, but I am still working. I have a high-deductible health insurance policy and health savings account through work now, but I will be signing up for Medicare soon. Can I keep my HSA account after I am on Medicare?

Save for Medical Costs With an HSA

You can continue to use the money already in the account tax-free for uninsured medical expenses. But you can no longer make new contributions to your health savings account after you sign up for Medicare.

Many out-of-pocket expenses qualify for tax-free HSA withdrawals even after you’re on Medicare. You can use the money to pay premiums for Medicare Part B, Part D prescription-drug coverage or all-in-one private Medicare Advantage plans (but not for medigap premiums). You can also use the money for co-payments and deductibles you pay for medical expenses, out-of-pocket costs for prescription drugs, vision and dental care, and even a portion of qualified long-term-care premiums ($3,500 in 2012 for people ages 61 to 70, for example and more if you’re older). For a full list of eligible expenses, see IRS Publication 502 Medical and Dental Expenses.

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.