HSA & Medicare: How to use your HSA to cover Medicare costs

5-minute readPublished 03/28/2024Updated 04:06 PM EST, 07/10/2025

The good news is—yes—you can use a Health Savings Account (HSA) to pay for certain Medicare expenses. However, there are rules on what expenses can be covered.

Here’s a closer look at the basics of HSAs and how they work with Medicare.

Key points

  • HSAs can help pay for eligible Medicare expenses like deductibles, premiums, coinsurance and copays
  • HSAs offer a triple tax advantage: tax-free contributions, tax-free growth and tax-free withdrawals for qualified medical expenses
  • Once you enroll in Medicare, you can no longer contribute to your HSA 

What is an HSA?

A Health Savings Account is a personal savings account designed to help you cover eligible healthcare expenses. Contributions to an HSA are typically tax-deductible and the funds can grow tax-free. Also, withdrawals for eligible medical expenses cannot be taxed.  

How can an HSA help pay for medical expenses?

HSAs help pay for wide range of eligible medical expenses like deductibles, copayments, coinsurance, dental care and vision care. They can also pay for eligible products like eyewear, hearing aids and wheelchairs.

Can I use HSA for Medicare expenses?

Yes. HSAs can be used for the following Medicare expenses:

  • Medicare Part A (Hospital Insurance): deductibles, coinsurance and expenses related to hospital or rehabilitation stays
  • Medicare Part B (Medical Insurance): monthly premium, deductibles and coinsurance
  • Medicare Part D (prescription drug coverage): prescription co-pays and items recommended by your doctor

Note: Once you enroll in Medicare, you can no longer contribute to your HSA.  

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5-minute readPublished 03/28/2024Updated 04:06 PM EST, 07/10/2025

Who can contribute to an HSA?

You can contribute if you meet all 3 of these conditions:

  1. You’re covered by an eligible high-deductible health plan (HDHP).
  2. You’re not enrolled in Medicare.
  3. You can’t be claimed by someone else as a dependent.

For 2025, the IRS defines an HDHP as any plan with a deductible of at least $1,650 for an individual or $3,300 for a family. 

The health plan can be through an employer or one you buy on your own. HSAs are portable, meaning they stay with you if you change employers or leave the workforce. Some employers make contributions to their workers’ HSAs as part of their benefits package.

Once you sign up for Medicare, you can no longer contribute to an HSA. But if you retire before you reach Medicare eligibility, you can still contribute to your HSA. If you contribute to your HSA after your Medicare eligibility starts or coverage begins, you may have to pay a tax penalty.

How much can you contribute to your HSA?

In 2025, the IRS’s HSA contribution limit is $4,300 for individuals and $8,550 for a family. People 55 and older can contribute an additional $1,000 per year.

You can use that money to pay for qualified healthcare expenses during the year, or you can save the money to use for qualified medical expenses.

What are the tax advantages of an HSA?

The money you contribute to your HSA, up to the annual limit, is not considered taxable income.

If you are already making maximum contributions to your IRA or 401(k), you may also be able to make pretax contributions to your HSA for healthcare expenses in retirement.

Once you meet your HDHP deductible, you can take out money at any time for eligible healthcare expenses, and you won’t pay taxes on the money you withdraw.

As a reminder, if you contribute to your HSA after your Medicare eligibility starts or coverage begins, you may have to pay a tax penalty. Be sure to consult a financial advisor to see if an HSA is a good choice for you to help pay for healthcare expenses in retirement.

Learn more about Medicare

We have over 120 articles about Medicare coverage, costs, enrollment and more. To learn more about Medicare, check out our Medicare resources.

Frequently asked questions

1. Do I have to stop HSA contributions 6 months before Medicare?

There’s no rule saying you must stop HSA contributions 6 months before Medicare. However, to avoid tax penalties, it’s generally recommended to stop 6 months before your Medicare coverage starts. This is because Medicare Part A coverage can retroactively apply for up to 6 months.

2. What is the penalty for HSA contributions while on Medicare?

The penalty for making HSA contributions after enrolling in Medicare is a 6% excise tax on the excess contributions. For example: if you contribute $1,000 to your HSA after enrolling in Medicare and don't withdraw it, you’ll owe a $60 tax. 

3. What Is a Medicare Medical Savings Account Plan?

A Medicare Medical Savings Account Plan, or MSA, is similar to an HSA and has 2 parts. The first part is a special type of high-deductible Medicare Advantage plan. The second part is a Medical Savings Account.2

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5-minute readPublished 03/28/2024Updated 04:06 PM EST, 07/10/2025

Sources

  1. “Publication 969 (2023), Health Savings Accounts and Other Tax-Favored Health Plans,” IRS.gov, last accessed July 8, 2025.
  2. “Medicare Medical Savings Account (MSA) Plans,” Medicare.gov, last accessed July 8, 2025.