financial planner Stephen Zelcer
Q&A - Should I avoid Medicare Part A just to participate in an HSA?

Q&A - Should I avoid Medicare Part A just to participate in an HSA?


Hi Stephen,
do you have a blog page or any other reference material that advises fed employees who have HDHP health plans with an HSA and who just turned 65 and who don’t plan to retire for a few years if they should accept Medicare Part A and decline Medicare Part B until such time that the employee is ready to fully retire?


I seem to remember you saying something to that effect, but unfortunately, I am unable to locate my notes from a training course that I took with you a couple of years ago.


I don’t have an article that hits his question head-on.

There is a benefit to have part A, namely that your hospital (or other facilities) out-of-pocket expenses will likely go to ZERO if you have both FEHB and Medicare A. Meaning, not having Part A will expose you to potential out-of-pocket risk.
But, by having Part A you lose out on the tax benefits of the HSA, which could be as high as $3k+ per year. And, on top of that, you’d also lose the potential investment growth in the HSA (HSAs allow you to invest the HSA funds).

I would encourage delaying part A, and riding the benefits of HSA as far as possible – but at the end of the day, the risk trade-off is a decision only your stomach can make.
I hope this helps!


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