Your HSA questions answered

Q: I’m 60, and I understand that I can withdraw up to $1,580 from my health savings account tax-free to pay long-term-care insurance premiums. Can I also use money from the HSA for my spouse’s longterm-care premiums?

A: Yes. You can use money from your HSA tax-free to pay eligible medical expenses for yourself, your spouse and your current tax dependents. The amount you can withdraw tax-free for long-term-care premiums

is based on the age of the person whose premiums are paid. For example, people age 51 to 60 can withdraw up to $1,580 (per person) in 2019 tax-free for long-term-care premiums; those age 61 to 70 can withdraw $4,220 in 2019.

The long-term-care policy must be “tax qualified,” which includes most standalone long-term-care policies (check with your insurer).

Q: I may sign up for a high-deductible health insurance plan at work so that I can contribute to a health savings account. I’m hoping to build up a nest egg for health costs in retirement. But what happens to my HSA if I switch jobs to a new company without a high-deductible plan?

A: Even if you switch to traditional health insurance, you can keep your money in the HSA. You won’t be able to make new contributions unless you return to a high-deductible plan. And once you go on Medicare, you have to stop contributions.

But even if you can’t make new contributions, you can leave the money invested in the tax-sheltered account. You can then tap the account anytime in the future to pay medical costs tax-free.

Q: Should people with federal employees’ retiree health coverage sign up for Medicare?

A: You generally have to sign up for Medicare if you are 65 or older and aren’t covered by health insurance from your current employer (or your spouse’s current employer). Retiree coverage is generally considered secondary to Medicare, so you may have gaps in coverage if you don’t sign up for Medicare.

But the one exception to this rule is retiree health insurance for former federal employees. If you don’t sign up for Medicare, federal retiree health coverage is considered to be primary, so you won’t have gaps in coverage. Most people still sign up for Medicare Part A, which is usually free, then they compare the costs and coverage for signing up for Part B versus federal retiree health insurance.

You need to make the decision carefully. If you are 65 or older and forgo Part B for the first eight months after losing employer coverage but later decide to sign up, you may have to pay a 10 percent late-enrollment penalty for every year you delayed.