By Ric Joyner, CEBS, GBA, CFCI
This is a constant question that arises by Agents. Let’s dissect the issue.
First, participating in Medicare is what prevents people from having an HSA. Defining this further; the participant cannot contribute any longer once they have Medicare or any insurance policy that is not defined as High Deductible (HDHP) in the HSA regs.
Second, the confusion that Agents appear to succumb, is whether being eligible for social security is enough to prevent participation in HSAs. This is not correct. The only rule is that no other insurance besides an HDHP plan is acceptable when having an HSA and Social Security is not comparative to any HDHP since it is a government “program” which contains certain insurance offerings, but is itself not insurance.
What should agents do? Advise clients that if they are on Social Security they are OK to contribute to an HSA. However, if they have medicaid, medicare or any other insurance plan other than a defined HDHP they CANNOT participate in an HSA.
Those that have HSAs and are now in medicaid, medicare or any other insurance plan, they MAY draw from their account but cannot CONTRIBUTE any new money.