At 70, She Pays $4,800 a Year for Long-Term Care Coverage. Her HSA Could Cover It Tax-Free Within an Age-Based Limit

Her health savings account has remained untouched for years while she pays a $4,800 long-term care premium directly from checking, even though an IRS rule tucked into an age-based chart could make the money in that account usable.

Every year, a 70-year-old retiree sends $4,800 for long-term care insurance from her checking account. Meanwhile, the HSA she accumulated while working sits idle, despite being designed for expenses like this.

Here’s how her HSA can pay that premium tax-free, how much the IRS allows at her age, and how she can reimburse herself for premiums already paid out of pocket. First, a quick refresher: a health savings account is paired with a high-deductible health plan, and contributions go in untaxed, grow untaxed, and can come out untaxed when used for medical care.

Medicare Stops New Contributions, but Withdrawals Remain Tax-Free

Once she enrolls in Medicare, she can no longer add new money. The IRS says, “Beginning with the first month you are enrolled in Medicare, your contribution limit is zero.” Spending is different: under 26 U.S.C. § 223(f)(1), money withdrawn from an HSA for qualified medical expenses is not counted as income, and those withdrawals are tax-free at any age.

Her Premium Qualifies, but Only Up to an Age-Based Cap

As a general rule, an HSA cannot be used to pay insurance premiums. One exception applies to a qualified long-term care insurance contract under § 223(d)(2)(C)(ii). The IRS says those premiums are subject to annual age-based limits. The limits depend on age at the end of the year:

At 70, her cap is $4,960, so her $4,800 premium falls $160 below that ceiling and can be paid from the HSA tax-free. If she turns 71 before the end of the year, the limit rises to $6,200.

If a premium exceeds the cap, the excess is not a qualified expense and cannot be covered tax-free from the HSA. That extra amount would need to come from checking. Married couples get a separate limit for each spouse because the cap applies per person.

Itemizing Usually Does Not Beat the HSA for Retirees

The capped premium can also be treated as a medical expense on Schedule A, but § 213(a) only allows a deduction for medical costs above 7.5% of adjusted gross income.

For example, with $80,000 of adjusted gross income, the first $6,000 of medical expenses produces no tax benefit. That is already more than her entire premium, and itemizing would only help if her total deductions were higher than the $16,100 standard deduction for single filers in 2026, which many retirees will not reach. The HSA route lets her take every dollar up to the cap tax-free without first clearing any threshold.

She also cannot use both tax breaks on the same dollars. The IRS says you cannot deduct qualified medical expenses on Schedule A that are equal to the tax-free HSA distribution.

Make Sure the Policy Is Tax-Qualified

All of this depends on the policy meeting the tax-qualified rules. The contract must be guaranteed renewable, have no cash surrender value that can be borrowed against or pledged, use refunds and dividends only to reduce future premiums or increase benefits, and generally exclude coverage for expenses Medicare would pay.

Check the first page of the policy or the outline of coverage. Qualified policies usually state that they are intended to be tax-qualified under Section 7702B(b). If that language is missing, contact the insurer and ask for written confirmation.

Hybrid life insurance and long-term care policies are governed by different rules. In those cases, the long-term care portion is treated as if it were a separate contract, and charges taken from the policy’s cash value do not qualify for a deduction under section 213. If she has a hybrid policy, she should ask the insurer to specify which part of the premium covers qualified long-term care insurance.

Medicare Premiums She May Be Missing

If she is 65 or older, her HSA can also pay for Medicare and other health coverage. That includes Part B, which costs $202.90 a month in 2026, as well as Part D and Medicare Advantage premiums. Medigap premiums do not qualify.

Those Part B and Part D costs are only the starting point. Income-related surcharges and coverage gaps can add thousands of dollars a year for retirees who do not expect them, and those costs were detailed in a free guide called Medicare’s Hidden Bills.

Reimburse Herself Before the Paperwork Disappears

The important point is that she does not need to pay the insurer directly from the HSA. The IRS allows tax-free withdrawals to pay or reimburse qualified medical expenses incurred after the HSA is established, and there is no requirement to withdraw money every year. That means she may reimburse herself now for premiums she paid from checking in earlier years, up to the annual cap for each year, as long as the premiums were paid after the HSA was opened and were never deducted. Anything paid before the account was opened does not count.

She should keep records showing that each withdrawal paid qualified medical expenses that were not reimbursed elsewhere and were not claimed as an itemized deduction in any year. Premium statements and bank records are enough.

The first two steps are straightforward: confirm that the policy is tax-qualified, then total every premium paid since the HSA opened and reimburse herself, using the age-based cap for each year. She should not also deduct those same premiums on Schedule A, because doing so would make the HSA withdrawal taxable.