Health Savings Accounts for Seniors?

Take-Away: A bill has been filed in the House of Representatives that would permit individuals who receive Medicare benefits to contribute to a health savings account (HSA.)

Quick Summary: Representative Ami Bera (D-California) has filed a bill called the “Health Savings for Seniors Act” that would amend the Internal Revenue Code [IRC 223(c)(2)(A)] to provide that an individual’s ‘health care’ coverage under Medicare is permissible for purposes of making contributions to a health savings account (HSA.) Accordingly, an individual who is enrolled in Medicare [enrolled under title XVIII of the Social Security Act] would not fail to be treated as an eligible individual to make contributions to a HSA for any period merely because that individual during such period is also covered under a ‘health plan’ as described in the Tax Code. Reading between the lines, the bill would also seemingly permit a one-time transfer of a limited amount from a Medicare enrollee’s IRA to a HSA [IRC 408(d)(9)]. The progress of this bill will be something to keep watching, especially as the cost of medical care continues to sky-rocket, costs that can be off-set, to some degree with the use of tax-free HSA distributions.