Medicare and HSA contributions

I will start medicare next May 1.

I have contributed to HSA account for past several years.

Today I found out some disappointing news. I may be penalized for a portion of my 2023 HSA contributions, done in 2023. (I did a cash contribution in early 2023 for full year, same as previous years).

Medicare rules imply I can’t do contribution for 6 months prior to MC. Some think this means I could only contribute 10 months worth for 2023, then nothing in 2024, even though I may have a HSA plan for 4 months of 2024 before MC.

Anyone familiar with MC funky rules!!!

Anyone else encounter this or familiar with HSA and start of Medicare?.

I will also be checking with my MC agent.

But heads up in case you are in similar situation.


I may be ok on this after talk with someone who knows more than me !!!


What did you find out? Usually the US tax code is pretty reasonable on healthcare stuff. But of course Medicare is a whole new level of complication.

Nope, but the rules are not funky; they are an inevitable result of the country we live in. This may help:

There is a six-month lookback period (but not before the month of reaching age 65) when enrolling in Medicare after age 65

If it doesn’t, and even if it doesn’t as IANAL, the full article, written by capitalists with ledgers:

So I’m going to be contributing until April 7, 2025, unless I leave the country and renounce my citizenship first.

For those who don’t know an HSA is an essential investment vehicle for all Americans (“US Citizens”); it’s got nothing to do with health care, it’s just a “boondoggle”, American for a capitalist ripoff, that we use to avoid taxes. Loads-a-money.

“Because Medicare is considered another health plan, you’re no longer eligible to contribute money to your HSA once you enroll.”

But they want you to enroll in MC, but then say to do so 3-4 months prior to start of coverage! Implies I have to not do HSA contribution for those months, or requires the funds to be backed out.

Still waiting for more info from Fidelity where my HSA account is.

In my case I am starting MC at age 65, but confusing if restrictions are just for those that postpone MC while they work past 65.

Found something that makes more sense.

There’s a six-month contribution look-back period if you sign up for Medicare after age 65 (although not before the month you turn 65), which means you receive retroactive health coverage and can’t make contributions during that period. To avoid penalties, you should stop saving to your HSA six months before you enroll in Medicare.

Full article

Another good article

Says what makes more sense:
If you haven’t yet enrolled in Medicare and have an HSA-eligible insurance policy, you can contribute at any time. However, after you sign up for Medicare, you can’t make new contributions, nor can your employer add to your HSA.

You must stop contributing to an HSA beginning the first month you’re enrolled in Medicare Part A or Part B, even if you also have a high-deductible health insurance policy through work. If you enroll in Medicare midyear, you may be able to make prorated contributions based on the number of months you had an eligible health insurance policy before your Medicare took effect.

For example, if your Medicare coverage starts July 1, you can make half the year’s contribution to the HSA. If you’re 55 or older in 2023, that means you can contribute up to $2,425 for the year if you have single coverage or $4,375 for family coverage.

1 Like

I was just at a Medicare seminar and many were shocked to hear you cannot access your HSA once you are on Medicare!

“Access” is an unfortunate word. As far as I can understand the actual rules on IRS publication 969, when you are covered by Medicare you can’t contribute, but you certainly can spend the money that’s already in your HSA.

This question about when do you have to stop contributing to the HSA because of Medicare is tricky. The point is that if you put money in the HSA when it is not allowed, the IRS considers that an “excess contribution” which gets penalized severely.

The key question is on what date a contribution would be classified as an “excess contribution” by the IRS. Is it the day you fill out the forms to apply for Medicare? Is it 6 months before that day? Is it the day the CMS accepts your application? Is it the day your Medicare insurance would actually start paying your medical bills?

I’ve concluded that the IRS means the last of those choices: they don’t allow you to contribute to the HSA for the time starting on the day your Medicare coverage would pay your bills, and I’ll show their actual statement below so you can judge for yourself what the rule is, because I’m not an accountant, lawyer, or government employee.

The CMS documents confuse this, because sometimes they use the phrase “enrolled in Medicare” to mean actively covered by the Medicare insurance, and other times they say “enroll” to mean “sign up” for coverage, coverage which may start in the future or which may begin retroactively by as much as 6 months before you signed up depending on your age when you sign up. That makes it seem to say that you’re not allowed to contribute to the HSA starting 6 months before you sign up for Medicare, but that’s not the actual IRS rule.

It appears to me the definitive rule comes from the IRS, because they are the ones who penalize HSA contributions when they are not allowed. Their rules are in publication 969.

Specifically, in in the section “Contributions to an HSA” subsection “Enrolled in Medicare” it states the following:

Beginning with the first month you are enrolled in Medicare, your contribution limit is zero. This rule applies to periods of retroactive Medicare coverage. So, if you delayed applying for Medicare and later your enrollment is backdated, any contributions to your HSA made during the period of retroactive coverage are considered excess. See Excess contributions, later.
You turned age 65 in July 2022 and enrolled in Medicare. You had an HDHP with self-only coverage and are eligible for an additional contribution of $1,000. Your contribution limit is $2,325 ($4,650 × 6 ÷ 12).

Given this (you can contribute the 6 months before the coverage started at age 65), I deduce that you can’t contribute to the HSA for the period where the Medicare coverage can actually pay for your medical expenses. That’s not the date on which you sign up. If you sign up before turning 65 it should be the first day of the month during which you turn 65. If you sign up after turning 65, the Medicare coverage is started retroactively, back to age 65 or back 6 months, whichever covers fewer months. It’s that last part that leads people to say stop contributing 6 months before Medicare starts, even though that’s not strictly the rule, it does stay safe from the IRS “excess contributions” rule.


@bkh Thanks so much!!!

My plan is to end my current HSA Marketplace plan end of April 2024.
I already did max contribution for 2023.

Enroll in Medicare to begin May 1, which is month that I turn 65. (Apply sooner, with May 1 start date.
Turn 65 end of May).

I think you are saying I would be ok to contribute for Jan-April 2024. I will double check when I make contribution to Fidelity.

I think this comment is key:

Medicare coverage is started retroactively

That is not my case.
I plan to sign up MC with start date May 1 2024, which is month I turn 65. Will end current insurance last day of April.

1 Like

That’s my take on it and I think I showed my sources, but I gave a disclaimer because I’m not an expert in taxes or Medicare, so please judge for yourself from IRS Publication 969.

Actually, you do add a good clarification. The thing that matters is not the date you send money to the HSA. It’s the pro-rated number of months that are allowed for contribution that year, namely the number of months your insurance is the high-deductable plan, before the Medicare coverage starts (by my reading of pub 969).

1 Like


I am also reading book called

10 CO$TLY Medicare Mistakes You Can’t Afford to Make.

Unbelievable how complicated it can be.