Working past 65 and covered by your employer’s high-deductible health plan (HDHP)? You can keep reaping the tax benefits of a Health Savings Account (HSA) — right up until you enroll in Medicare. Once that enrollment begins, the rules change dramatically. Here’s a concise guide to help you stay compliant and avoid unwanted penalties.

Who Can—and Cannot—Contribute

The instant you are enrolled in any part of Medicare, you lose the right to add new money to your HSA. Crucially, that exclusion applies only to those enrolled in Medicare. Your spouse or other family members who remain HSA-eligible may continue making contributions and using the full family contribution limit as long as the HDHP in place is a family-level plan.

2025 Contribution Limits

• Family HDHPs may contribute up to $8,550 in 2025.
• Self-only HDHPs are capped at $4,300.
• Anyone aged 55 or older can tack on an extra $1,000 “catch-up” contribution.
  Remember, the limit hinges on the type of HDHP—family or self-only—not on the number of participants who fund the HSA.  Suppose one spouse on a family plan turns 65, enrolls in Medicare, and must stop contributing.   In that case, the other spouse can still contribute the full family maximum because the policy itself remains a family plan.

Three Tests for HSA Eligibility

1. Covered by an HDHP and no other health coverage.
2. Not be enrolled in Medicare for that month.
3. Not be claimable as someone else’s tax dependent.

The Six-Month “Look-Back” Rule

When you apply for Medicare Part A after turning 65, Medicare can retroactively start your coverage up to six months earlier (but never earlier than your 65^th birthday month). Because HSA contributions are barred for any month, you are deemed covered by Medicare, and a retroactive enrollment date automatically triggers excess contributions for those prior months.
The Journal of Accountancy’s practical advice is to stop HSA contributions for at least six months before you apply for Medicare or Social Security benefits. Doing so eliminates the possibility of inadvertent overfunding.

What to Do If You Over-Contribute

1. Mistakes happen. If you realize you added money after your eligibility ended:
2. Cease new contributions immediately.
3. Calculate your prorated limit. Multiply the annual limit by the number of months you were truly eligible, then divide by twelve. Only complete, eligible months count.
4. Fix the excess by Tax Day. You have until the regular April 15 filing deadline (plus extensions) to either deposit any remaining allowable amount or pull out the extra funds—and any earnings—so you avoid the 6 percent excise tax on excess contributions.

Best Practices as You Approach Medicare

• Mark a six-month warning on your calendar. Once you know when you will file for Medicare or Social Security, circle the date six months prior and plan to shut off payroll deferrals before that point.
• Alert HR or your payroll provider as soon as possible—shutting off automatic contributions often takes one or two pay cycles to process.
• Front-load smartly. It is perfectly legal to max out your annual HSA limit before Medicare begins. Ensure you will remain eligible for every month represented by those contributions.
• Keep separate accounts straight. If your spouse is still HSA eligible, consider opening or funding a separate HSA in their name; they can contribute up to the family maximum (including the $1,000 catch-up if they are also over 55).

Contact Us Today

Navigating HSA contributions around Medicare requires careful timing, especially with the six-month look-back rule. If you are approaching age 65 and want to avoid costly excess contribution penalties, it is imperative that you speak with a tax professional. Contact us at 203-489-0612 for personalized guidance.

Written by: Cristian Carlos