Dear Liz: I’m 65. Can I use a health savings account to pay my Medicare premiums? I do not collect Social Security yet.
Answer: If you already have an HSA, then yes, you can make tax-free withdrawals from it to pay your Medicare premiums. Once you enroll in Medicare, though, you won’t be able to make further contributions to an HSA.
HSAs allow people with high-deductible health insurance plans to save money for current or future medical costs. These accounts offer a rare triple tax advantage: contributions are deductible, the funds grow tax deferred and withdrawals are tax free if the account owner has incurred eligible expenses. Since the funds can be invested and the balance rolled over from year to year, many HSA owners treat these accounts as a supplemental way to save for retirement.
It’s important, though, that the account owner ultimately uses these funds. Although a spouse can inherit an HSA and treat it as their own, any other beneficiary would face income taxes on the balance.
Once you’re 65, you can withdraw HSA money for any reason and not face penalties, but you will be taxed on the withdrawals if they don’t meet the rules for qualified medical expenses.
For example, you can take tax-free withdrawals to pay premiums for the various parts of Medicare: Part A (hospital coverage, which is free for most people), Part B (doctor’s visits), Part C (Medicare Advantage), and Part D (prescription drug coverage). The premium for a Medicare supplemental policy, though, isn’t considered to be a qualified medical expense, so you’d owe taxes on any withdrawal for that.
Premiums for other health insurance policies typically don’t qualify for tax-free withdrawals, with a few exceptions, such as paying for COBRA continuation coverage.
Keep in mind that you can use previous years’ medical expenses to justify a tax-free withdrawal, as long as the unreimbursed expense occurred after opening your HSA. You’ll want to keep receipts and other records showing that the expenses qualified and you haven’t been reimbursed (through an insurance claim, for example).
Dear Liz: I disagree with the tax advice you gave to the 85-year-old lady and her husband, age 87, who hadn’t filed a tax return in the last three to five years. Maybe their combined income is so low they don’t have to file. Did you consider that? If not, you should. Not everyone needs a tax adviser to add two Social Security income forms together and determine that, “No, hon, we don’t have to file.”
Answer: That was actually my first thought. But the fact that the writer said her spouse hadn’t “paid” their income tax in several years indicates they may have owed taxes prior to that point, and that filing tax returns had been routine.
Many people in their 80s don’t have to file federal tax returns because their income is too low. For the 2025 tax year, singles 65 and over with gross incomes under $15,750 don’t need to file. The limit is $31,500 if one member of a married couple is 65 or older and $34,700 if both spouses are 65 or older.
But it would be dangerous and irresponsible to assume that just because someone is older, they no longer owe taxes. The free Tax-Aide service mentioned in the previous column can assess the couple’s situation and provide reassurance if they don’t need to file or help if they do.
Liz Weston, Certified Financial Planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.
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