If you’re heading into Medicare and still have money in a Health Savings Account, you have an opportunity to use those dollars very efficiently. For 2026, the IRS still allows HSA funds to pay certain Medicare premiums when the expense qualifies, and CMS has published the current Medicare premium amounts you need for planning. Most people pay $0 for Part A, the standard Part B premium is $202.90 per month, and high-income beneficiaries may owe additional IRMAA amounts. (cms.gov)
Key Takeaways
- HSA funds can generally pay Medicare premiums when you are 65 or older, but not Medigap premiums. The IRS specifically excludes Medicare supplemental policies, such as Medigap, from the HSA premium rule. (irs.gov)
- For 2026, the standard Medicare Part B premium is $202.90 per month. If you are not entitled to premium-free Part A, the monthly premium is $311 or $565, depending on your work history. (cms.gov)
- Income-related Medicare premium surcharges still matter. In 2026, Part B and Part D IRMAA tiers begin above $109,000 single / $218,000 joint MAGI, and the Part D surcharge is added on top of your plan premium. (cms.gov)
- If you are still HSA-eligible in 2026, the contribution limits are $4,400 self-only and $8,750 family. Once Medicare enrollment begins, your HSA contribution limit becomes zero starting with that month. (irs.gov)
- If you take money out of an HSA for a nonqualified expense after age 65, it is taxable but not subject to the 20% additional tax. That age-based exception still applies in 2026. (irs.gov)
2026 Medicare Premiums at a Glance
The table below summarizes the 2026 Medicare premium figures most relevant to HSA planning. CMS published the 2026 rates on November 14, 2025. (cms.gov)
| Medicare item | 2026 amount | HSA planning note |
|---|---|---|
| Part A premium | $0 for most people | Most beneficiaries qualify for premium-free Part A because they or a spouse worked long enough and paid Medicare taxes. (cms.gov) |
| Part A premium if you buy it | $311 or $565/month | Applies to people who do not qualify for premium-free Part A. (cms.gov) |
| Part B standard premium | $202.90/month | This is the base premium for most enrollees. (cms.gov) |
| Part B IRMAA | $0.00 to $487.00/month | Higher-income beneficiaries pay more; the total monthly premium ranges from $202.90 to $689.90. (cms.gov) |
| Part D IRMAA | $0.00 to $91.00/month | Part D IRMAA is added on top of the plan premium. (cms.gov) |
2026 Part B and Part D IRMAA tiers
| 2026 MAGI threshold | Part B total monthly premium | Part D IRMAA |
|---|---|---|
| Single ≤ $109,000 / Joint ≤ $218,000 | $202.90 | $0.00 |
| Single > $109,000 to $137,000 / Joint > $218,000 to $274,000 | $284.10 | $14.50 |
| Single > $137,000 to $171,000 / Joint > $274,000 to $342,000 | $405.80 | $37.50 |
| Single > $171,000 to $205,000 / Joint > $342,000 to $410,000 | $527.50 | $60.40 |
| Single > $205,000 to $500,000 / Joint > $410,000 to $750,000 | $649.20 | $83.30 |
| Single ≥ $500,000 / Joint ≥ $750,000 | $689.90 | $91.00 |
These figures come from CMS’s 2026 Medicare premium fact sheet. Part D premiums vary by plan, and the IRMAA amount is added on top of the plan premium. (cms.gov)
What HSA Funds Can Pay in 2026
The IRS says HSA funds may be used for qualified medical expenses, and for HSA purposes that includes Medicare and other health care coverage if you are 65 or older, except for a Medicare supplemental policy such as Medigap. The IRS also states that Medicare Part B and Part D premiums are medical expenses. (irs.gov)
Generally eligible HSA uses
- Medicare Part A premiums, if you are voluntarily buying Part A. (irs.gov)
- Medicare Part B premiums. (irs.gov)
- Medicare Part D premiums. (irs.gov)
- Other Medicare-related health coverage, if you are 65 or older and the expense otherwise meets the HSA rules. (irs.gov)
Not eligible for tax-free HSA payment
- Medigap / Medicare Supplement premiums are not qualified HSA medical expenses. (irs.gov)
- If you are under age 65, Medicare premiums for your spouse or dependent who is 65 or older are generally not qualified medical expenses for HSA purposes. (irs.gov)
Important recordkeeping rule
To keep an HSA distribution tax-free, you need records showing that the distribution was used exclusively for qualified medical expenses and that the expense was not previously reimbursed or paid from another source. The trustee reports HSA distributions on Form 1099-SA, and you report HSA activity on Form 8889 with your return. (irs.gov)
The Shoebox Strategy, Updated for 2026
The so-called shoebox strategy is really just disciplined recordkeeping. Instead of spending HSA funds immediately, you save the premium bills and proof of payment, then reimburse yourself later from the HSA once you are sure the expense qualifies. The IRS does not require you to withdraw from the HSA every year. (irs.gov)
Here’s the clean 2026 version of the strategy:
Step 1: Pay the Medicare premium
Pay the premium normally, whether by direct billing or withholding. For planning purposes, the 2026 standard Part B premium is $202.90 per month, or $2,434.80 per year if you pay the standard rate for all 12 months. (cms.gov)
Step 2: Save your records
Keep the premium notices and your HSA records together. The IRS wants proof that the distribution was used for a qualified medical expense and wasn’t reimbursed elsewhere. (irs.gov)
Step 3: Reimburse yourself from the HSA
When you are ready, take an HSA distribution equal to the qualified premium expense. If the expense qualifies, the distribution is tax-free. (irs.gov)
Step 4: Report the distribution correctly
File Form 8889 with your tax return and retain your records. If the distribution was used for a qualified medical expense, it is tax-free; if it was not, it is taxable and may be subject to the additional 20% tax unless an exception applies. (irs.gov)
Editorial correction from the legacy post: The HSA reimbursement itself does not make Social Security “tax-free.” What matters is that the HSA distribution matches a qualified medical expense and that you keep the required records. (irs.gov)
2026 HSA Contribution Reminder
If you are still HSA-eligible in 2026, the current contribution limits are:
| Coverage type | 2026 HSA contribution limit |
|---|---|
| Self-only HDHP coverage | $4,400 |
| Family HDHP coverage | $8,750 |
| Additional catch-up contribution if age 55+ | $1,000 |
The catch-up is available only if you are otherwise HSA-eligible. Beginning with the first month you are enrolled in Medicare, your HSA contribution limit is zero, and retroactive Medicare coverage can retroactively create excess contributions. (irs.gov)
Long-Term Care Premiums: 2026 Limits
If you also use HSA funds for qualified long-term care insurance premiums, the amount you can treat as a medical expense is limited by age. For taxable years beginning in 2026, the IRS issued the following age-based limits. (irs.gov)
| Attained age before year-end | 2026 LTC premium limit |
|---|---|
| 40 or less | $500 |
| More than 40 but not more than 50 | $930 |
| More than 50 but not more than 60 | $1,860 |
| More than 60 but not more than 70 | $4,960 |
| More than 70 | $6,200 |
These limits are adjusted annually, so the amount you can exclude changes over time. (irs.gov)
Common Mistakes to Avoid
- Trying to use HSA funds for Medigap premiums. Medigap is still excluded from the HSA premium rule. (irs.gov)
- Forgetting that Medicare enrollment ends HSA contributions. Your contribution limit becomes zero starting the first month of Medicare coverage. (irs.gov)
- Assuming a nonqualified HSA withdrawal after age 65 is penalty-free in every sense. It is exempt from the 20% additional tax, but it is still taxable income if not used for a qualified expense. (irs.gov)
- Missing recordkeeping. The IRS wants proof that the distribution was exclusively for a qualified medical expense and that it was not reimbursed elsewhere. (irs.gov)
- Double-dipping on your tax return. If an HSA paid or reimbursed the expense, you cannot also deduct the same amount again as a medical expense on your federal return. (irs.gov)
- Using an HSA for a spouse’s Medicare premium when you are under 65 and assuming it qualifies automatically. It generally does not. (irs.gov)
Frequently Asked Questions
Can I use HSA funds to pay Medicare premiums directly?
Yes, if the premium qualifies under the HSA rules and you meet the age/eligibility conditions. The IRS allows HSA distributions for qualified medical expenses, and Medicare Part B and Part D premiums are treated as medical expenses. (irs.gov)
Can I use HSA funds for Medicare if the premium is deducted from Social Security?
You can still reimburse a qualified expense from your HSA, but you must keep records proving the expense qualifies and has not already been reimbursed. The HSA rules focus on the expense and the records, not on the payment channel itself. (irs.gov)
Are Medigap premiums ever HSA-qualified?
No. The IRS specifically excludes Medicare supplemental policies such as Medigap from the HSA premium rule. (irs.gov)
If I’m over 65, are nonqualified HSA withdrawals taxed?
Yes, they are taxable as income, but the 20% additional tax does not apply after you reach age 65, become disabled, or die. (irs.gov)
What forms do I need?
The trustee reports HSA distributions on Form 1099-SA, and you report HSA activity on Form 8889 with your federal return. Keep your supporting records with your tax files. (irs.gov)
Can I still contribute to an HSA after Medicare starts?
No. Beginning with the first month you are enrolled in Medicare, your HSA contribution limit becomes zero. Retroactive Medicare coverage can also create excess contributions for earlier months. (irs.gov)
Conclusion
For 2026, the HSA strategy is still one of the cleanest ways to cover Medicare premiums tax-efficiently, but the details matter. Use current premium figures, respect the Medigap exclusion, watch the Medicare-enrollment cutoff for HSA contributions, and keep good records. If you handle those points correctly, HSA funds can be a powerful retirement healthcare tool. (cms.gov)
Disclaimer: This article is provided for informational purposes only and does not constitute legal, tax, accounting, or financial advice. Tax laws, IRS guidance, and Medicare rules can change, and your personal facts may lead to a different result. Please consult a qualified tax professional or benefits advisor regarding your specific situation.
