As you may already know, HSA funds can only be put toward qualified medical expenses in order to be withdrawn income tax-free. As was before, you can continue to use your HSA to pay for expenses like dental work, eye exams, chiropractic and acupuncture visits, but Medicare eligibility opens up a few more doors.
The I.R.S. allows you to use your Health Savings Account to pay for Medicare Part B premiums. You can also pay Part D drug and Medicare Advantage plan premiums out of your HSA. If your income is above certain thresholds, you will be charged more for your Medicare Part B and Part D premiums, however. Using your HSA to pay these increased premiums can help to alleviate this burden until your income decreases in retirement.
You can also pay for Medicare related deductibles, copays and coinsurance with your HSA. Even with comprehensive Medicare Supplement plan, you may still have out of pocket costs. HSA plans can cover those. They can also cover the cost sharing associated with Medicare Advantage plans like deductibles and copays.
You can also use your HSA to pay for the care of a family member if you wish. The I.R.S allows for tax-free distributions from HSA’s to cover health expenses for a spouse or a dependent. This is one of the great advantages of a health savings account. This is true even if you’re on Medicare and they are not.