A Retired Couple Faces a Six-Figure Healthcare Bill. Paying It From an HSA, Not an IRA, Keeps It From Taxing Their Social Security.

The Couple at the Kitchen Table

A married couple, both about 67, recently retired and on Medicare, is staring at a stack of medical bills. Between premiums, a surgery, ongoing prescriptions, and the dental work Medicare does not cover, they are looking at what will likely run well into the six figures over the rest of their retirement. They have a traditional IRA, a Health Savings Account (HSA) they built up during their working years, and Social Security checks that just landed with the 2026 cost-of-living adjustment of 2.8%.

The question they are wrestling with sounds simple. Where should the money come from? On a retirement forum, one spouse in nearly the same spot asked whether to just pull it from the IRA since the bills are deductible anyway. The answer matters more than they realize, because the account they choose changes how much of their Social Security gets taxed and what they pay Medicare two years from now.

Why the Source of the Money Drives Everything

Pulling, say, $40,000 from a traditional IRA to pay medical bills counts as ordinary income. It lands in adjusted gross income (AGI), then flows into provisional income, the amount the IRS uses to decide how much of a Social Security check is taxable. Once provisional income crosses the relevant thresholds on a joint return, up to 85% of the benefit becomes taxable. That slice is the share of the benefit exposed to ordinary income tax, not the tax rate itself.

That same withdrawal also raises modified adjusted gross income (MAGI), which Medicare looks back at two years later to set premiums. For joint filers in 2026, the standard Part B premium of $202.90 applies as long as MAGI stays at or below $218,000. Cross the next tier and the Part B premium climbs to $284.10 per person, with a separate Part D surcharge of $14.50 stacked on top. Both spouses pay the higher amount.

Now run the same $40,000 out of the HSA for qualified medical expenses. The distribution is tax-free. It does not appear in AGI, does not raise MAGI, and does not enter the provisional income calculation. The Social Security check is treated exactly as it would have been with no withdrawal at all. The IRMAA tier stays put. Same bills paid, same care received, no ripple through the tax return.

What the HSA Can Actually Cover After 65

Retirees often underuse the HSA because they think of it as a working-age account. After 65, it pays a wider range of costs tax-free than people expect:

1. Medicare premiums. Part B, Part D, and Medicare Advantage premiums are all qualified expenses. Medigap and other supplemental policies are not.
2. Out-of-pocket medical care. Deductibles, copays, prescriptions, surgeries, and the bills traditional Medicare leaves behind.
3. Dental, vision, and hearing. Cleanings, glasses, and hearing aids, none of which traditional Medicare covers.
4. Qualified long-term care costs and long-term care insurance premiums, within the age-based limits the IRS sets each year.

How This Fits With the Rest of the Plan

The HSA is not always the answer. A couple without a meaningful HSA balance has to draw from somewhere, and the IRA is often the only realistic option. Large medical bills paid from taxable sources can qualify for an itemized deduction for the portion above 7.5% of adjusted gross income (AGI), which softens the federal tax hit. The deduction does not erase the provisional income bump, though, so Social Security taxation and the IRMAA lookback can still bite.

For couples who do have an HSA, the order of withdrawals matters. Spending HSA dollars first on medical bills, then taking only what is needed from the IRA for living expenses, keeps reported income lower in the years where healthcare spending spikes. That is the year the tax torpedo and the IRMAA cliff are most dangerous, and the year the HSA earns its keep.

What to Walk Away With

The hardest mistake to undo is a large IRA withdrawal in a high-medical-expense year. It can push a couple into a higher IRMAA tier that follows them two years later, on top of taxing more of their Social Security right now. Spending from the HSA first costs nothing extra and preserves both the benefit and the premium tier.

Every couple’s mix of accounts and income looks a little different, and the thresholds shift each year. A short conversation with a tax preparer before writing the check is usually worth more than it costs.

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