Can you use your HSA after you retire?

At age 65 and older, your funds continue to be available without federal or state income tax (in most states) for eligible medical expenses. For instance, you may use your HSA to pay certain insurance premiums, such as Medicare Parts A and B, Medicare HMO, or your share of retiree medical coverage offered by a former employer. Funds cannot be used tax-free to purchase Medigap or Medicare supplemental policies.

However, with enrollment in Medicare, you are no longer eligible to contribute to your HSA. If you reach age 65 or become disabled, you may still contribute to your HSA if you have not enrolled in Medicare.

If you use your funds for eligible medical expenses, the withdrawals from your account remain tax-free. If you use the funds for non-eligible expenses after you turn 65, the distribution becomes taxable but exempt from the 20% penalty.