Making Sense of FSAs When You Hit 65+ : Ask The Hammer: Many people approaching age 65 face a dilemma when it comes to flexible spending accounts (FSAs). Can you keep contributing to an FSA after enrolling in Medicare? Or do you need to give it up entirely? Can I contribute to an fsa after age 65? Can you have an FSA with Medicare? In this episode of Ask The Hammer, Jeffrey Levine focuses on Making Sense of FSAs When You Hit 65+. A Flexible Spending Account (FSA) is a tax-advantaged financial account that allows an employee to set aside a portion of their pre-tax earnings to pay for eligible medical expenses, dependent care expenses, or other qualified expenses as determined by the plan.

No Need to Give Up Your FSA: The good news is that you do not have to give up your FSA when you sign up for Medicare, says Levine. This is a common area of misunderstanding.While Medicare enrollment at 65 typically means you can no longer contribute to a health savings account (HSA), the same does not apply to FSAs. “You don’t have to give up contributions to an FSA,” explains Levine.So if you plan to keep working past 65, even part-time, you can likely continue contributing to an FSA through your employer’s health plan.

Special Rules for Large Employers: The ability to retain your FSA depends in part on whether you work for a large employer. Companies with 20 or more employees have special rules. Employees of large companies can delay Medicare enrollment without penalty. So they may choose to only sign up for Medicare Part A at 65 and keep their employer health coverage and FSA. Medicare Part B also comes with a cost, so workers may want to hold off. But Part A is free for most people, so Levine suggests enrolling even if you keep workplace benefits.

You Can Still Use FSA Funds: Let’s say you’ve contributed to an FSA but then enroll in Medicare. The good news is you do not have to forfeit the money in your FSA. “You don’t have to give up either an FSA or an HSA. The accumulated funds already when you enroll in Medicare,” says Levine. With an FSA, it is generally “use it or lose it.” But employers can allow limited rollovers year to year. So check your plan details. The key takeaway is that Medicare enrollment does not mean closing out your FSA entirely. Make sure to use any balances for qualified healthcare expenses.

More Flexibility Than HSAs: An HSA stands for a Health Savings Account. It’s a tax-advantaged savings account that individuals in the United States can use to pay for qualified medical expenses if they have a high-deductible health plan (HDHP). Unlike FSAs, you cannot contribute to an HSA once you are on Medicare. But again, any money already in the account can still be used tax-free. In comparison, FSAs offer more flexibility surrounding Medicare enrollment. Just be aware of any “use it or lose it” provisions based on your employer’s policies.The rules around FSAs, HSAs, and Medicare can be confusing. But with the right information, you can make the most of your workplace benefits into retirement.

If you’re interested in making sense of FSAs when you hit 65+, watch this video. To see more episodes of Ask The Hammer, please click on this link: https://www.finstream.tv/videos/ask-the-hammer/