Can I Pay Medicare Supplement Premiums From My HSA?

You cannot pay Medicare Supplement premiums from your HSA on a tax-free basis. Federal law carves Medigap policies out of the age-65 exception that otherwise lets HSA owners use their accounts for Medicare premiums, so a withdrawal to cover a Medigap bill counts as a taxable distribution. The money is still yours to take, but the tax benefit disappears the moment it goes toward a supplemental policy.

Why Medigap Is Excluded by Statute

The exclusion is written directly into the tax code. Section 223 allows HSA funds to pay premiums for “any health insurance other than a medicare supplemental policy” once the account holder turns 65.1Office of the Law Revision Counsel. 26 U.S. Code 223 – Health Savings Accounts IRS Publication 969 repeats the carve-out in plain language, allowing “Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).”2Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans

Medigap policies cover the copayments, deductibles, and coinsurance that Original Medicare leaves to the beneficiary, and they are sold by private insurers rather than run by the federal government.3Medicare.gov. What’s Medicare Supplement Insurance (Medigap)? The statute draws a line between the government-run Medicare premiums and the private supplemental coverage sold around them. Plan letter does not change the answer. Plan F, Plan G, Plan N, and every other standardized Medigap plan sit on the wrong side of that line.

Medigap also fails to qualify under any of the other insurance-premium exceptions written into the HSA rules. It is not COBRA continuation coverage, it is not qualified long-term care insurance, and it has no tie to unemployment compensation. Every tax-free route for insurance premiums has been closed off for Medigap specifically.

What Happens If You Pay Medigap From Your HSA

Nothing stops you from pulling the money out of the account and sending it to your Medigap insurer. The consequence is tax, not legality. The withdrawal becomes a non-qualified distribution and gets added to your gross income for the year. For an account holder who is 65 or older, that is where it ends: ordinary income tax, no additional penalty. For someone under 65, which can happen with a disabled Medicare beneficiary, the distribution also carries a 20% additional tax.2Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans

Fixing a Mistaken Withdrawal

If the Medigap payment was a genuine error, you may be able to put the money back. The IRS allows a mistaken distribution to be returned to the HSA when the withdrawal resulted from a “mistake of fact due to reasonable cause.” The deadline is the tax filing deadline, without extensions, for the first year you knew or should have known about the mistake. A timely repayment keeps the amount out of gross income, avoids the 20% additional tax, and does not count as an excess contribution.4Internal Revenue Service. Instructions for Forms 1099-SA and 5498-SA

Your HSA custodian is not required to accept the return, so call before you send anything. If the custodian takes it and had already issued a Form 1099-SA for the original distribution, they will need to file a corrected form.

Medicare Premiums Your HSA Can Cover Tax-Free

The age-65 exception does cover the government-side Medicare premiums, and knowing which premiums qualify keeps you from leaving the tax benefit on the table while you look for a way to handle Medigap. The qualifying premiums are:

Distributions get reported on IRS Form 8889, which tracks what came out of the HSA and how much went to qualified medical expenses.7Internal Revenue Service. Instructions for Form 8889 (2025) Keep records showing which premium each distribution paid, because the IRS will not match the dots for you.

A Legitimate Workaround Using Old Receipts

The HSA rules contain a quirk that gives Medigap-holders a way to use their account balance without breaking the premium rule. There is no deadline for reimbursing yourself from an HSA for a qualified medical expense. If you paid a dental bill out of pocket in 2024, you can withdraw HSA funds to reimburse yourself in 2030, provided the expense was incurred after you opened the HSA and you kept the receipt.

That timing rule opens a door. The Medigap premium itself still fails to qualify, so paying the insurer directly from the HSA is out. But you can pay the Medigap premium from your checking account and then take a tax-free HSA reimbursement for other qualified expenses you have already paid out of pocket. Doctor visits, dental work, prescriptions, hearing aids, eyeglasses, and your Medicare Part B premiums all qualify. A stack of saved receipts becomes a pool of tax-free withdrawals you can draw against when a Medigap bill comes due.

The method depends on paperwork more than it depends on strategy. Pay qualified expenses out of pocket when cash flow allows, keep every receipt, and let the HSA balance grow. When you need to free up cash for a Medigap premium, reimburse yourself from the HSA against the backlog of older qualified expenses. The Medigap premium remains a non-qualified expense on paper, and the HSA distribution is matched to receipts that do qualify.

Paying a Spouse’s Medigap Premium

The same exclusion follows the policy, not the person. An HSA can pay a spouse’s qualified medical expenses, and once the account holder reaches 65, the account can cover a spouse’s eligible Medicare premiums (Parts A, B, D, and Medicare Advantage) tax-free. A spouse’s Medigap premium, though, is still a Medigap premium, and it does not qualify no matter whose HSA pays it or how old either spouse is.2Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans