Health care costs are rising for everyone, but as an older adult, you may face more challenges than the general population. For those worried about their financial future and their ability to retire, the prospect of medical care after retirement is another concern to add to the list. For instance, aging adults tend to face more chronic conditions and medical problems, which can lead to higher medical and prescription costs, straining fixed incomes. HSAs are a growing trend and are often promoted as a valuable money-saving option. You may be wondering if an HSA is a good option for you based on your unique medical needs and circumstances, especially since once you become eligible for Medicare, you are no longer eligible to contribute to an HSA. Regardless of this, the benefits of an HSA can be substantial for adults getting closer to retirement. 

An HSA is paired with a high deductible health plan (HDHP). This may concern some older adults with chronic conditions, as this involves more out-of-pocket costs than a traditional health plan with a lower deductible. It is important to remember, however, that the HSA provides a valuable savings component that can either be used to pay for out-of-pocket costs tax-free or to save money for the future. Here are some advantages of an HSA: 

Lower Premiums

Having lower premiums means there is more cash to invest in the HSA and to eventually put toward the deductible (as opposed to higher monthly premiums associated with traditional health plans.  


If your employment situation changes, you keep the HSA and have the benefit of past investments.  

Employer contributions

Your employer will also contribute to your HSA each year, boosting your ability to save. 

Tax-free savings with tax-free interest

HSAs provide tax-free funds to pay medical bills and funds also accumulate tax-free to save for the future. The best part is, once you turn 65 and are eligible for Medicare, you can use those funds for anything without penalty, making it a valuable retirement savings tool. In fact, HSAs offer more favorable terms than IRAs in terms of saving for retirement health needs.  

The catch-up contribution

In addition to the annual limit for HSA contributions, people ages 55 to 65 can contribute an extra $1,000 per year.  

It is also important to be aware of potential drawbacks. If you have many out-of-pocket medical expenses, you may struggle to use your HSA for retirement savings since you will be using the funds for your current bills. In addition, the desire to take advantage of the HSA as a savings tool may lead some individuals to forgo medical care or prescription drugs that they need. This is never a good idea, as it can lead to more expensive and serious medical complications down the road.  

If you are considering an HSA, examine the benefits and potential risks and be sure to discuss them with your family. Click here to check out different HSA Calculators and for more information about how HSAs work in general. For more information on offering your employees health benefits, click here or give us a call to speak to one of our benefits advisors today!


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