How Your HSA Can Reimburse You for Medicare Premiums Paid
Jan 13, 2024
Even if your Medicare premiums are automatically deducted from
your Social Security check, you can take tax-free withdrawals from an HSA to
reimburse yourself.
Question: You told another reader that
people can’t make new contributions to a health savings account once they
enroll in Medicare, but they can withdraw the money tax-free from the account
to pay Medicare premiums. If I have
my Medicare payments deducted directly from my Social Security benefits, can
I still withdraw money from my HSA for those expenses? And do
I need to withdraw the money right away, or can I keep the money growing in the
HSA and withdraw it for those premiums sometime in the future?
Answer: Even though you have your Medicare
premiums paid directly out of your Social Security benefits, you can withdraw
money tax-free from your HSA to reimburse yourself for those expenses. After
you turn 65, you can use HSA money tax-free to pay premiums for Medicare parts B and D and Medicare Advantage plans (but
not premiums for Medicare supplement policies), in
addition to paying for other out-of-pocket medical expenses.
And there’s no time limit for
withdrawing money from an HSA to pay for those expenses. You can keep the money
growing tax-deferred in the account, then withdraw it tax-free at any time in
the future to reimburse yourself for any eligible expenses you have incurred
since you opened the HSA. So if you’ve had an HSA for several years and didn’t
realize you could withdraw money tax-free for Medicare premiums, you could
reimburse yourself for all of those premiums at any time. You just need to keep
receipts showing that you paid for eligible expenses. And you can’t withdraw
money for expenses you incurred before you opened up the HSA. “When reimbursing
himself from the HSA, it’s important that he maintains proof of payment and
documentation that the expenses were eligible, in the event of an audit
(although he does not need to submit any receipts to be reimbursed),” says
Begonya Klumb, head of HSAs for Fidelity Health Care Group.
Source: Kiplinger