HSA, Medicare premiums, and Fidelity

[BarbWire]

Looking ahead to Medicare in mid-2022:

I have an HSA with about $30K in it, and will add another $6K or so before hitting Medicare in July 2022. I do not plan to take SS until I'm 70.

My intent is to use the HSA funds to pay my Medicare Part B and Part D premiums. I expect to be in the IRMAA level 1 group. For at least the first few years I will use a Medigap policy rather than Medicare Advantage.

I may also use my HSA to pay my long term care premium (about $1500/year) if that is allowed -- I'm finding conflicting information on that.

So, first: do I understand the rules correctly, that I may use HSA funds to pay some Medicare premiums?

Second: the HSA , recently transferred to Fidelity from HSAdministrators, is currently sitting in cash. How would you invest it knowing that there will be systematic withdrawals starting 18 months from now? (At HSAdministrators it was in a VG life-cycle fund).

Thanks!

 

[audreyh1]

Yes, DH uses the HSA to pay Medicare premiums - part B and part D IRMAA. He uses the Fidelity billpay to pay CMS Medicare directly.

AFAIK you can pay part D, Part B, and Medicare Advantage premiums from your HSA, but not Medigap premiums.

He sets aside enough in his core account to cover a year’s worth of premiums and the remainder is mostly in bond funds with a very small exposure to stocks, because he will probably draw it all down in about 5 years.

 

[BarbWire]

Thank you -- that will be the plan, then. Next I need to confirm whether or not I can pay my Long Term policy premium with HSA funds once I'm enrolled in Medicare.

I'll also start looking at Fidelity bond funds. This is my only account at Fidelity so I'm not yet familiar with their offerings.

 

[MichaelB]

Thank you -- that will be the plan, then. Next I need to confirm whether or not I can pay my Long Term policy premium with HSA funds once I'm enrolled in Medicare.

I'll also start looking at Fidelity bond funds. This is my only account at Fidelity so I'm not yet familiar with their offerings.

Yes, long term care premiums are eligible HSA expenses. From the IRS https://www.irs.gov/publications/p969#en_US_2019_publink1000204086

 

[audreyh1]

Yes, you can use money from your HSA tax-free to pay your long-term-care insurance premiums, with the maximum annual tax-free amount based on your age.

https://www.kiplinger.com/article/i...ing-a-hsa-to-pay-long-term-care-premiums.html

 

[BarbWire]

Perfect, thank you!