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Q&A: High Deductible Health Plan — Medicare

Can the spouse of an employee still be covered under an employer’s High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) and enroll in Social Security benefits at the same time?

The answer to this question is two-part. Yes, the spouse can still be covered under the HDHP. But, there can be no HSA contributions if the spouse is 65 or older, receiving Social Security, and therefore required to enroll in Medicare. This is because in order to be eligible to contribute to an HSA you cannot have any health insurance other than the HDHP — this includes Medicare.

This means the spouse would have to meet the high deductible out-of-pocket themselves.

Well, what if the spouse applies for Social Security benefits, but not Medicare? 

That’s not possible. Anyone 65 years old or older receiving Social Security benefits is required by law to also be signed up for Part A of Medicare and Medicare is not considered a High Deductible Health Plan. Therefore they no longer meet the qualifications for contributing to an HSA.

It probably makes sense, then, for the spouse to enroll fully in Medicare Parts A, B, and D. The Part B deductible is only $185. 

The spouse might stay on the employer plan as supplemental insurance, but you would have to compare that plan’s coverage and costs to Medigap policies or Medicare Advantage plans available on the open market. 

I can’t imagine that a high-deductible employer plan would be better than Medicare, however. Medicare is heavily subsidized by the government. Employer policies are subsidized by the employer, but if the subsidy takes the form of HSA contributions that the spouse can’t use, it’s no bargain.

Does Medicare affect Social Security benefits?

Social Security and Medicare are separate programs, but they are intertwined. It’s important to understand how your Medicare coverage intersects with your Social Security benefits. For example, you might want to consider having your Medicare premiums deducted directly from your Social Security, as this provides certain protections from possible financial harm as a result of Medicare increases.

Mark Singer, CFPⓇ, lives in Swampscott and has been in the financial industry for over three decades. If you have any questions contact him at 781.599.2660 or mark@55retire.com. The content was developed in conjunction with Elaine Floyd, CFP®.

 

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