Studies show Baby Boomers (those born between 1946-1964) will be the fastest growing generation in the workforce next year. Whether for pleasure or out of necessity, some Baby Boomers will continue to work past age 65, the age at which they become eligible for Medicare.
Most retirees have a 7-month window to apply for Medicare when they approach age 65. However, there is a special enrollment period for those who are still working past 65 and covered by an employer sponsored plan which is usually eight months after they terminate employment.
Those who are 65, still working, and insured by a High Deductible Health Plan may want to delay enrolling in Medicare if they want to continue funding their HSA. Medicare enrollees are not allowed to contribute to an HSA, even if they continue to have coverage under their employer plan. The general rule of thumb is to stop contributing to an HSA up to six months prior to enrolling in Medicare to avoid making excess contributions to the HSA.
Excess contributions are not only disallowed but may be subject to back taxes and penalties. Therefore, it is important to coordinate your employer provided health insurance benefits, HSA contributions, and future retirement date with your projected Medicare enrollment date so that you avoid paying any unnecessary taxes and penalties. If you have any questions or uncertainty about your specific situation it is recommended that you contact a financial planner or health insurance expert.