If someone retires early, they aren’t eligible for Medicare, and need to buy private insurance. While employed, those health premiums can be paid with pre-tax income…

But is there a way to pay premiums in retirement, pre-tax? (e.g. from an IRA or 401(k) after eligibility age?)

  • partial_accumenEnglish
    2·
    1 month ago

    Yes for 18 months post retirement, but you need to plan years in advance.

    HSAs or Health Savings accounts can do this under specific circumstances. HSA contributions are pre-tax and can be used for qualified medical expenses including insurance premiums for COBRA or while receiving unemployment (if you were involuntarily terminated). If you are able HSA eligible during your working years, you can make pre-tax contributions (including Section 125 for anotehr 7% savings) to an HSA account you own. Then in your later years use those funds to pay for the short period of time HSA is allowed to be used for insurance premiums (18 months or so).

    Additionally, post 65 you can also use HSA funds to pay for Medicare part B and D premiums.