Consumers who use Health Savings Accounts (HSAs) and will soon be eligible for Medicare should be aware of certain changes.
In the past few years, Health Savings Accounts have been gaining ground in the industry with millions of consumers enrolling in health plans compatible with the tax-free savings accounts. And now with the Baby Boomer generation set to retire and become eligible for Medicare, those who utilize HSAs may wonder what happens to their funds.
“Health Savings Accounts have shown to be a great tool to help people lower their health insurance premiums and save some money tax-free,” said Mark Colwell, Manager of Consumer Marketing at GoHealthInsurance.com. “But there are a lot of federal rules and regulations surrounding the use of HSAs. It’s important for those who are going on Medicare to know what to expect.”
Can I still contribute to my HSA once I’m eligible for Medicare?
Once you become eligible for Medicare, seniors cannot continue contributing money in their HSA. But consumers can still use the HSA funds tax-free on medical expenses including premiums, deductibles and prescription drugs.
What happens if I become eligible for Medicare during the middle of the year?
You can still contribute money to your HSA until you are officially eligible for Medicare. For example, if your birthday is in May you can continue to add money to your HSA until April.
What is the maximum contribution amount?
The maximum amount you can contribute to an HSA in 2011 is $6,150 for a family policy and $3,050 for an individual health insurance policy. For individuals over the age of 55, they can save an additional $1,000 for a total of $4,050, which is known as a catch-up contribution. During the year you are eligible for Medicare, however, you can only deposit a prorated amount based on the number of months before eligibility.
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