Medicare and HSAs

[WCMason]

hmmm. I'd need to double check, but feels like I have clients who've left group coverage post-65 whose Part A coverage start date did not incur this 6-month retro thing you mention.

Feelings aside, Part A is always backdated up to six months if enrollment takes place after 65th birth month. It's not optional. The carriers/CMS have just corrected the incorrect Part A effective date you may have put on those applications.

 

[somarco]

I should have anticipated the OP might ask “why can’t he get a January 1 effective date for Part A” question. Part A is always backdated up to six months so the only way he can get a January 1 start for it is to apply next July. No exceptions to that rule.

Very disappointed you did not see that coming.

If the person did wait until June to apply for Part A, and had already made his/her HSA contribution, do they have to take it back?

If an HSA contribution falls in the forest and no one knows about it, did it really happen?

 

[gregj]

The carriers/CMS have just corrected the incorrect Part A effective date you may have put on those applications.

you mean the dates printed on their Medicare cards? Ok

 

[WCMason]

you mean the dates printed on their Medicare cards? Ok

No, I mean the carriers or CMS likely corrected the incorrect Part A effective dates you had to have put on some applications. Otherwise how could you not have noticed the effective date for Part A was backdated six months for every person who delayed enrolling in Part A until retirement?

 

[JustinTime]

I highly recommend taking a look at this publication entitled "Enrolling in Medicare Part A & Part B" which is straight from Medicare's website (see page 27 of the document):
https://www.medicare.gov/Pubs/pdf/11036-Enrolling-Medicare-Part-A-Part-B.pdf

I have coverage through a health savings account (HSA)
What happens to my HSA when I sign up for Medicare?
You can’t contribute to your HSA once you’re enrolled in Medicare. If you contribute to your HSA after your Medicare enrollment date, you may have to pay a tax penalty. If you’d like to continue contributing to your HSA, you shouldn’t apply for Medicare, Social Security, or Railroad Retirement Board (RRB) benefits. Because your enrollment date for Medicare (i.e., when your coverage starts will generally be 6 months before your application date, you must stop contributing to your HSA 6 months before applying for Medicare.

Premium-free Part A coverage begins 6 months back from the date you apply for Medicare (or Social Security/RRB benefits), but no earlier than the first month you were eligible for Medicare.

To avoid a tax penalty, you should stop contributing to your HSA at least 6 months before you apply for Medicare.

You can only enroll in Part B at certain times. If you have an HSA with a High Deductible Health Plan (HDHP) based on your or your spouse’s current employment, you may be eligible for a Special Enrollment Period to enroll in Part B later without a lifetime late enrollment penalty. If you qualify, you can wait to enroll in Medicare until you (or your spouse) stop working or lose your employer group health plan coverage based on that employment. You can withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses (like deductibles, premiums, coinsurance, or copayments).

 

[JamDad]

I highly recommend taking a look at this publication entitled "Enrolling in Medicare Part A & Part B" which is straight from Medicare's website (see page 27 of the document):
https://www.medicare.gov/Pubs/pdf/11036-Enrolling-Medicare-Part-A-Part-B.pdf

I have coverage through a health savings account (HSA)
What happens to my HSA when I sign up for Medicare?
You can’t contribute to your HSA once you’re enrolled in Medicare. If you contribute to your HSA after your Medicare enrollment date, you may have to pay a tax penalty. If you’d like to continue contributing to your HSA, you shouldn’t apply for Medicare, Social Security, or Railroad Retirement Board (RRB) benefits. Because your enrollment date for Medicare (i.e., when your coverage starts will generally be 6 months before your application date, you must stop contributing to your HSA 6 months before applying for Medicare.

Premium-free Part A coverage begins 6 months back from the date you apply for Medicare (or Social Security/RRB benefits), but no earlier than the first month you were eligible for Medicare.

To avoid a tax penalty, you should stop contributing to your HSA at least 6 months before you apply for Medicare.

You can only enroll in Part B at certain times. If you have an HSA with a High Deductible Health Plan (HDHP) based on your or your spouse’s current employment, you may be eligible for a Special Enrollment Period to enroll in Part B later without a lifetime late enrollment penalty. If you qualify, you can wait to enroll in Medicare until you (or your spouse) stop working or lose your employer group health plan coverage based on that employment. You can withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses (like deductibles, premiums, coinsurance, or copayments).

My .02

IMO, the line that I expanded and made bold and underlined is the key to this whole discussion. Do not confuse someone aging in with someone who continued with credible coverage and being older than 65. If this isn't true, why would the line read "no earlier than the first month you were eligible." The Part A date on the card for someone turning 65 and applying for Medicare Part A is the date of the month they turn 65 (except born on the 1st) not 6 months earlier.

Since the person could apply in November, before turning 65 in December it would appear that he could contribute 11/12ths to the HSA with his coverage Again, the "To avoid a tax penalty, you should stop contributing to your HSA at least 6 months before you apply for Medicare" would apply to those folks who have waited past their birthdate by more than 6 months.