If you are working and covered by your employer’s high deductible health plan with an HSA, you need to stop all HSA contributions, including your employer portion, at least six months before you apply for your Social Security and/or Medicare benefits. Medicare looks at the date of your application, not the month you request to start your benefits when you apply.

You must take Medicare Part A when you receive your Social Security benefits; Social Security will backdate your Medicare Part A by up to six months or back to the month you turned 65, whichever comes first.

Medicare is not a high-deductible plan, so any HSA contributions made after you start Medicare will subject you to taxes and penalties on those contributions made after you start Medicare Part A. Those contributions become fully taxable and subject to an additional 10%; you can also be subject to a 6% excess tax on those excess contributions. You will need to discuss the tax consequences with your tax advisor.

Options at Full Retirement Age

However, if you plan on continuing working until you reach your full retirement age (FRA) and remain under your employer’s health insurance plan, there is a way you can receive all those monthly benefits. You must wait until your HSA contributions have stopped for six months, then file for your Social Security benefits and backdate it by six months. Social Security goes by your benefit start date and Medicare uses your application date to backdate your Part A coverage by six months. If you have dependent children, they become eligible in the month you begin your Social Security benefits, so they would also be eligible to receive six months of retroactive benefits.

Your other option would be to delay applying for six months; you would receive a 4% increase in your Social Security benefits as it would earn delayed retirement credits (DRCs) of 2/3 of 1% per month. You lose this increase if you take the six months in retroactive benefits; however, if dependents are involved, it might be the better option.


The AMAC Foundation’s Social Security Advisory Service can help answer questions about your individual needs. Contact us at 1-888-750-2622 or email [email protected].

For additional information about the services and resources AMAC Foundation provides, please visit our website www.amacfoundation.org


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