Health Savings Accounts (HSA’s) & Medicare
Health Savings Accounts can be a way for Americans to put aside money to help pay their out of pocket medical expenses with tax free dollars.
There are specific limits that change annually but it allows those with HSA’s (health plans with no fixed copays and where all charges are paid by the insured at contracted rates between the provider and insurance company) until the insured reaches the maximum out of pocket. These plans were originally designed for those healthy individuals who wanted a stop loss in case something catastrophic happened. Please see the specific limits for HSA’s posted under the health care tab on this website.
It’s protection against a major illness. Today, because of rising health care costs and the affordable care act becoming not affordable, these plans are again becoming popular.
Under CMS regulations, an HSA is not allowed when you go on Medicare. The month you enroll in Medicare you can no longer contribute to your HSA. You may continue to use the money you’ve accumulated in your HSA to pay for deductibles, premiums, copays or coinsurance tax free.
Now those rules get complicated. If you are still employed and your employer offers an HSA type plan you can continue on that HSA plan under certain circumstances. If the employer has more than 20 employees you can take Part A and not Part B and continue on the HSA. The exception to that rule is if you are not collecting social security you don’t have to take Part A. If your employer has less than 20 employees then you must take Parts A & B but no HSA.
It is difficult for anyone to understand these complicated rules and regulations. I would submit to you that CMS could make these less complicated which would help everyone.