When someone starts collecting Social Security retirement benefits at 65 or later, they’re automatically enrolled in Medicare Part A. There’s no way to take Social Security while refusing Part A; the two are locked together. A federal court case, Hall v. Sebelius, settled the point: it confirmed there’s no legal right to decline Part A while continuing to collect Social Security, and the D.C. Circuit upheld that ruling in 2012. The only way to avoid Part A is to forgo Social Security entirely, and repay any benefits already received.
Why This Matters for HSAs
Here’s the catch: once you’re enrolled in any part of Medicare (Part A, Part B, or Part D), you are no longer eligible to contribute to a Health Savings Account (HSA) .
That means if a 65-year-old worker claims Social Security while still covered by an HSA-qualified health plan, they’ll have to stop HSA contributions immediately . This can come as a big surprise to employees who thought they could keep building their HSA balance while working past 65.
A Simple Example
Let’s say Jane is 65, still working, and covered by her employer’s HSA-qualified health plan. She decides to claim Social Security. The moment she does, she’s automatically enrolled in Medicare Part A, and her HSA contributions must stop.
If Jane had kept working without claiming Social Security, she could have continued contributing to her HSA until she eventually enrolled in Medicare.
What Agents and Employers Should Know
- Timing is everything : Clients who want to maximize their HSA contributions may want to delay Social Security benefits .
- Educate employees : Many don’t realize that Medicare Part A enrollment is automatic with Social Security.
- Plan ahead : HR teams and benefits advisors should help workers understand the trade-offs before they make an irreversible decision.
The Bottom Line
The decision to claim Social Security at 65 isn’t just about monthly income, it has ripple effects on health benefits and tax savings. Once you take Social Security, you’re in Medicare Part A, and your HSA contributions stop.
For agents and advisors, this is a rule you can’t ignore, and a critical conversation to have with clients approaching 65.