Using an HSA for Medicare, Long-Term Care, and Other Premiums
You can use HSA funds for certain insurance premiums, including Medicare premiums after age 65 and qualified long-term care insurance premiums, but with specific rules and limits.
Medicare Premiums
Once you turn 65 and enroll in Medicare, you can make tax‑free withdrawals from your HSA to pay Medicare Part B, Part D, or Medicare Advantage premiums.
- You cannot directly deduct these premiums from your Social Security check, but you can reimburse yourself from your HSA.
- You can also use HSA funds to pay for Medicare supplement (Medigap) premiums, but Medicare supplement premiums are not HSA‑eligible.
- After enrolling in Medicare, you can no longer contribute to an HSA, but you can still use existing funds for qualified medical expenses.
Long-Term Care Insurance Premiums
You can use HSA funds to pay qualified long-term care insurance premiums up to IRS‑set annual caps based on your age.
- 2026 limits (per person):
- Age 40 or under: $500
- 41–50: $930
- 51–60: $1,860
- 61–70: $4,960
- 71+: $6,200
- The policy must be a tax‑qualified long‑term care insurance contract under federal law, meaning it must be guaranteed renewable, not build cash value, and have specific benefit triggers (e.g., inability to perform two or more activities of daily living for at least 90 days).
- Any amount above the cap is a non‑qualified distribution, subject to income tax and a 20% penalty if under 65.
If you want to maximize HSA use, consider locking in long‑term care coverage while premiums are lower and within your HSA cap, and use HSA funds strategically for Medicare costs in retirement.
Other HSA‑Eligible Premiums
Three other exceptions to the general “no insurance premium” rule are:
- COBRA continuation coverage premiums.
- Health insurance while receiving unemployment benefits.
- Medicare premiums after age 65 (as above).
Key Takeaways
- Medicare premiums: Payable with HSA funds after age 65 (Part B, D, Medicare Advantage).
- Long‑term care premiums: Payable with HSA funds if the policy qualifies and within age‑based caps.
- Not eligible: Regular health plan premiums, dental/vision, Medigap premiums, or other non‑listed insurance costs.
- Tax treatment: Qualified withdrawals are tax‑free; non‑qualified withdrawals are taxable plus a 20% penalty if under 65.
One Last Secret ‘Trick’
There is a once-in-a-lifetime ‘trick’ you can take to fund your HSA: the IRA-to-HSA rollover. Account holders can roll over $4,400 for single coverage or $8,750 for family coverage, plus the additional contribution limit if they’re over 55, and use the money for medical expenses tax-free.
The amount you can roll over is the maximum contribution allowable in a calendar year (which increases over time).
If you have questions about how best to use your HSA funds, we can help! You can schedule a strategy session to talk about your unique situation and how we might be able to help. If you are a current client, contact us for a personal review of your situation at info@astifinancial.com.