A bipartisan measure that’s pending in the House would modify the way health savings accounts interact with Medicare.
Under current rules, you cannot contribute to an HSA once you enroll in Medicare — even if only Part A.
Although the bill would remove that limitation, it also aims to change two current HSA benefits that apply to the 65-and-older crowd.
Under a bill pending in Congress, Medicare beneficiaries would be allowed to set aside money in health savings accounts — something they currently can’t do.

However, it also would change a couple of the benefits that come with HSAs for anyone who’s 65 or older.

Called the Health Savings for Seniors Act and recently introduced in the House, the bipartisan bill (H.R. 7435) revives past legislative efforts to let individuals on Medicare contribute to HSAs. With many workers using these accounts in conjunction with their employer health plan, more people are likely to reach age 65 — the point at which you become eligible for Medicare — with an HSA in tow.



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“Many clients who have established HSA accounts think that they can continue funding the HSA past enrollment in Medicare,” said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans. “They’re usually surprised to find out they can’t.”

The bill’s tradeoffs? It would remove the ability to use HSA withdrawals to pay for Medicare premiums — something that’s currently allowed. It also would eliminate penalty-free withdrawals for nonmedical expenses in the 65-and-older crowd as now permitted.

At the end of 2021, there were 32 million of these accounts — up 8% from 2020 — holding an aggregate $98 billion, according to a report from investment consultant Devenir. The firm expects that to grow to 38 million accounts with $150 billion in assets by the end of 2024.

link: https://www.cnbc.com/2022/05/1...t-has-tradeoffs.html