Once you turn age 65, as Bsch4477 mentions above, you can withdraw money from your HSA account for any reason without a penalty. In order for the distribution to be tax- and penalty-free, it must be used for qualified medical expenses.
If you're enrolled in Medicare, you can still have an HSA and use it for qualified medical expenses.
If you use the funds for other purposes, the amount withdrawn will be subject to regular income taxes.
Turning 65 doesn't change the tax-free status of your HSA distributions used for qualified medical expenses, but it does remove the 20% penalty for non-qualified withdrawals, meaning you only pay ordinary income tax on those funds.
You will still need to report all HSA distributions on your tax return, even if they're tax-free, using IRS Form 8889.
Click here for "What Is the IRS Form 8889?"
Click here for more detailed information regarding HSA contributions.
Click here for "What is a Health Savings Account?"
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