What happens to an HSA when an account holder turns 65?
First, and most importantly, the account remains an HSA and the funds in the account can continue to grow tax free and any distributions for qualified medical expenses come out tax free.
Once the HSA account holder turns 65 they can use the money in their HSA to reimburse their own Medicare or qualifying retiree health insurance premiums tax free. They can also reimburse these premiums tax free for their spouse or disabled tax dependent, however they cannot make tax free distributions to reimburse anyone’s (their own, their spouse’s or a disabled tax-dependent’s) Medicare premiums until the HSA account holder turn age 65.
Can an account holder who is 65 or older contribute to an HSA?
If an account holder remains an otherwise eligible individual then yes, they can contribute to an HSA. Just turning 65 (or older) does not determine whether or not someone can contribute to an HSA. The most important question is has the HSA account holder enrolled in any Part of Medicare. Once an account holder enrolls in Medicare they are no longer eligible to contribute to an HSA.
What happens when an account holder enrolls in Medicare?
Once you enroll in any Part of Medicare you are no longer eligible to open or contribute to an HSA. The account holder can continue to spend the money in their HSA tax free on qualified medical expenses for themselves, their spouse and any eligible dependents they have.