HSAs and Medicare in Oregon

If you contribute to an HSA through an Oregon employer and plan to keep working past 65, the timing of Medicare matters. Get it wrong and you can owe IRS excise taxes, lose months of contributions, or face Medicare late-enrollment penalties. This page explains the rules and how to plan around them.

Why you can't contribute once you have Medicare

IRS rules let you contribute to an HSA only if you are covered by a qualifying high-deductible health plan (HDHP) and have no other disqualifying coverage. Medicare counts as other coverage. Once any part of Medicare (A, B, C or D) starts, you can't make or receive HSA contributions, even if:

• You stay on your employer's HDHP.
• You have only premium-free Part A.
• Your employer keeps depositing money for you.

You can still spend the money already in your HSA, tax-free, on qualified medical expenses, including many Medicare costs.

HSA contribution limits for 2026 and 2027

In the year your Medicare starts, your limit is generally prorated: you can contribute one-twelfth of the yearly limit for each full month before Medicare began (IRS Publication 969).

The 6-month Part A lookback

This is the rule that catches people. When you sign up for premium-free Part A after your 65th birthday month, Social Security makes your Part A coverage start up to 6 months before the month you apply, but never earlier than the month you turned 65. For HSA purposes, your Medicare starts when that retroactive coverage starts.

Social Security enrolls you in Part A automatically

If you are getting Social Security or Railroad Retirement benefits when you turn 65, or start them later, you are enrolled in Part A automatically. You can't refuse premium-free Part A while getting those benefits; the only way out is to withdraw your Social Security application and pay back what you received. Applying for Social Security after 65 also starts Part A with the same up-to-6-month lookback.

So if you want to keep contributing to an HSA past 65:

• Don't apply for Social Security retirement benefits yet, and don't sign up for Part A.
• Plan your last contribution at least 6 months before you expect to apply for Social Security or Medicare.

People who get Social Security disability benefits are enrolled in Medicare automatically after 24 months of benefits.

How to delay Medicare and keep contributing

1. Confirm your job coverage lets you delay. Delaying Part B without penalty works only if you have group coverage from your or your spouse's current job and the employer has 20 or more employees. See employer plan and Medicare coordination.
2. Don't start Social Security. Getting benefits triggers Part A.
3. Stay on a qualifying HDHP. Your plan must meet the IRS HDHP rules for the year.
4. Pick your Medicare start date first. Then count back 6 months for your last HSA contribution. Tell payroll to stop employer and payroll contributions.
5. Sign up during your special enrollment period. When your job coverage ends, you have 8 months to sign up for Part B without penalty and 2 months to join a Part D or Medicare Advantage plan. See the Part B special enrollment period.

If you contributed too much

Contributions for months after your Medicare (including retroactive Part A) started are excess contributions. The IRS charges a 6% excise tax on the excess for each year it stays in the account. For example, if 6 months of contributions fall inside your retroactive Part A coverage, those 6 months are excess, and you owe 6% of that amount every year until you take it out.

To avoid the excise tax, withdraw the excess contributions and any earnings on them by your tax-filing deadline, including extensions. The earnings are taxable income. Ask your HSA custodian for an excess-contribution removal, and talk with a tax professional.

Using your HSA after Medicare starts

• Medicare premiums: after 65, HSA money can pay Part A (if you pay it), Part B, Part D and Medicare Advantage plan premiums tax-free. Medigap premiums don't qualify.
• Out-of-pocket costs: deductibles, copays, coinsurance, and many dental, vision and hearing costs Medicare doesn't cover.
• Long-term care insurance premiums, up to IRS age-based limits.
• Non-medical withdrawals after 65 are taxed as income but no longer carry the extra 20% penalty.

If you're married

• Your spouse having Medicare doesn't stop you from contributing if you are still HSA-eligible. You can use your HSA for your spouse's qualified expenses, including their Medicare premiums.
• Each spouse 55 or older who is HSA-eligible can add the catch-up amount, but only to an HSA in his or her own name.
• If you are the one who gets Medicare, you stop contributing; a younger spouse who is still eligible may be able to contribute up to the family limit to their own HSA. Check IRS Publication 969 or a tax professional.

Oregon notes

• PEBB and OEBB retirees: Oregon's PEBB retiree medical coverage ends the last day of the month before the month you become Medicare-eligible (OAR 101-050-0010), and OEBB early-retiree medical coverage ends the last day of the month before your Medicare effective date (OAR 111-050-0015). Plan Medicare, and your last HSA contribution, around those dates. See PEBB and Medicare and OEBB and Medicare.
• Small employers: if your Oregon employer has fewer than 20 employees, Medicare usually pays first at 65, so delaying Part B to keep an HSA can leave you with large unpaid bills.
• Help with timing: for Medicare choices you can request a call from a licensed insurance agent; for tax questions, a tax professional.

Related guides

• Working past 65 in Oregon
• Employer plan and Medicare coordination
• The Part B special enrollment period
• Retiring at 66, 67, 68 or 70

Sources

• IRS — Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
• IRS — Rev. Proc. 2026-24, 2027 HSA limits
• Medicare.gov — Working past 65 (stop HSA contributions 6 months before)
• Medicare.gov — When does Medicare coverage start?
• Social Security — Sign up for Medicare
• Or. Admin. Code § 101-050-0010, PEBB retiree eligibility and termination (via Cornell LII)
• Or. Admin. Code § 111-050-0015, OEBB early retiree coverage (via Cornell LII)

Frequently asked questions

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