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Hi How do I stop my HSA and start an HRA? I will be getting Medicare next February. I am on SS disability. I have a High Deductible health plan and want to keep it.

James Burtner
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    The tag-wiki for the [tag:hsa] tag indicates that its usage requires an accompanying appropriate country tag. Please [edit] your question and let us know where you're located. Also, is this the HRA you're talking about? – shoover Aug 02 '23 at 15:16
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    It’s my understanding that HRAs are owned by the employer, and are only contributed to by the employer. You won’t have an employer, will you? – RonJohn Aug 03 '23 at 01:12
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    What benefit do you expect from an HRA over an HSA? – D Stanley Aug 04 '23 at 20:30
  • @RonJohn: Or ex-employer, which I think is the standard scenario. – keshlam Aug 10 '23 at 12:11
  • @keshlam would an ex-employer contribute to an ex-employee's HRA? – RonJohn Aug 10 '23 at 14:45
  • Not as such. They credit it with some amount of value to start it off, and some will credit it with yearly "interest", but remember that an HRA is a convenient fiction for a company's retirement benefit process, not a real account; it isn't contributed to as much as credited in the company's books... and rules for accessing it, or whether it exists at all, can change at the company's whim. You seem to be asking the wrong question here; what are you trying to accomplish? – keshlam Aug 10 '23 at 14:53

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You don't. These are two different programs.

If you have a Flexible Spending Account (funded by your employer as part of your retirement package), that may turn into an HRA at some point. Mine does so when I go on Medicare. Both are "notional accounts" (not "national", apologies for the typo) -- they're the company offering to pay some of your medical costs -- you can't access them except through the mechanism the company sets up and the company can change that program, or drop it entirely, any time they want to. Again using myself as a example, I won't be able to access the HRA unless I'm on a company-sponsored Medicare+ plan.

Health Savings Account is a real investment account, funded by you with some possible matching contribution from the company, and under your control via the brokerage handling it. Like a traditional retirement account, it gets funded with pretax dollars and grows tax-free. BUT there isn't income tax when you withdraw the money either, if you're doing so to pay for eligible medical expenses. You can tap it for other purposes if you're willing to pay tax, but if you live long enough they drop that penalty and it becomes just a general tax-free retirement account. The big restrictions are that you can only put money into it while you are on a "high deductible with HSA" health plan, and there's a cap on how much you can contribute per year.

The remaining question is whether you can have high-deductable-with-HSA coverage after starting Medicare. My research says that if you are eligible for Medicare but do not actually enroll, you can continue to contribute to your HSA. Once you enroll in any part of Medicare, you will no longer be eligible to contribute to your HSA. Even enrolling in Part A alone will disqualify you from depositing to your HSA.

And Medicare has a substantial late-enrollment penalty. Read up on that and run your own numbers to be sure, but I don't think that's likely to be a good choice.

As to why HSA contribution is stopped when Medicare starts -- take that up with your congresscritters.

keshlam
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    You (and employer if applicable) can contribute to HSA only if you have an HDHP and no other health insurance (except some special-purpose or limited types) and no Medicare, but the HDHP does not have to be an employer plan, they are also available in the individual market, including the PPACA 'exchanges' aka 'marketplaces'. – dave_thompson_085 Aug 06 '23 at 00:28
  • Thanks for the correction. – keshlam Aug 06 '23 at 03:23