Turning 65 HSA Question

[Devin01]

Having a client is getting ready for Medicare but is worried about what he read on the social security retirement benefits PDF regaridng funding an HSA..

Client is worried about HSA contribution, I was under the impression that once you become eligible you should not contribute to an HSA. Many of us know this.

According to the booklet Social Security booklet they recommend to stop contributing to your HSA at least six months before you apply for Medicare. I thought the month of was fine to avoid the tax penalty on HSA contribution? Has anyone come across this? Client is thinking about delaying enrollment into Medicare for 6 months because of this.


Retirement Benefits from the 2018 Social Security:
To avoid a tax penalty, you should stop contributing to your HSA at least six months before you apply for Medicare.

https://www.ssa.gov/pubs/EN-05-10035.pdf

 

[kgmom219]

Did he max it out for 2018? And he turns 65 in 2018?

 

[Devin01]

she turns 65 in 2018 and I m not sure if it is maxed out> Just curious .. does it matter how much they are putting in

 

[TwoCents]

The "stop contributing to an HSA" guidance 6 months prior to Medicare enrollment generally applies to anyone who hasn't started Medicare upon turning 65. This is due to CMS backdating Part A up to 6 months from the time you submitted your application. So if I kept working beyond 65 and delayed both Part A and B, I then apply for Medicare when I'm 70 in July, then my Part A likely would be backdated to January and if I contributed to an HSA in January, I'm then caught in a stupid "gotcha."

 

[kgmom219]

My understanding is that if the max $3450 (2018) then you divide that by 12 ($287.50) per month and then figure out her month.

So if she turns 65 in July, she eligible to put in $1725 in her 65th year.

On the other hand, I know a ton of people who kept A at 65, called me when they were 67 or whatever, had kept putting in the max HSA contribution from 65 to 67 and didn't have a problem at tax time.

The correct answer is "you should not contribute to your HSA account in your 65th year if you are going to activate Medicare A and B".

The practical answer is "You should be fine and if not, you shouldn't be able to take the tax deduction. I don't think there is a penalty, but I am not CPA and can't even play one on TV. You really need to contact your CPA"

Note the works "shouldn't" and "think". CYA for the win!

 

[WCMason]

Having a client is getting ready for Medicare but is worried about what he read on the social security retirement benefits PDF regaridng funding an HSA..

Client is worried about HSA contribution, I was under the impression that once you become eligible you should not contribute to an HSA. Many of us know this.

According to the booklet Social Security booklet they recommend to stop contributing to your HSA at least six months before you apply for Medicare. I thought the month of was fine to avoid the tax penalty on HSA contribution? Has anyone come across this? Client is thinking about delaying enrollment into Medicare for 6 months because of this.


Retirement Benefits from the 2018 Social Security:
To avoid a tax penalty, you should stop contributing to your HSA at least six months before you apply for Medicare.

https://www.ssa.gov/pubs/EN-05-10035.pdf

If you read the SSA publication you linked to carefully you will see that it does not say that a person must stop contributing to the HSA six months prior to their Medicare eligibility date. It doesn’t say that one must stop contributing to the HSA even after 65 so long as they don’t enroll in Medicare.

So, someone with an HSA only needs to postpone signing up for Medicare and can max out their HSA beyond age 65. They must keep in mind that Part A enrollment is retroactive up to six months and the HSA contributions must be prorated based on that effective date, not the month they enrolled.

From the SSA publication you linked to:
“If you contribute to your HSA after
your Medicare coverage starts, 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.”

 

[kgmom219]

If you read the SSA publication you linked to carefully you will see that it does not say that a person must stop contributing to the HSA six months prior to their Medicare eligibility date. It doesn’t say that one must stop contributing to the HSA even after 65 so long as they don’t enroll in Medicare.

So, someone with an HSA only needs to postpone signing up for Medicare and can max out their HSA beyond age 65. They must keep in mind that Part A enrollment is retroactive up to six months and the HSA contributions must be prorated based on that effective date, not the month they enrolled.

From the SSA publication you linked to:
“If you contribute to your HSA after
your Medicare coverage starts, 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.”

And for today's "I give up" on this issue.

Client has been taking SS since age 62. Fully funds an HSA. Received his Medicare card with both A and B. Told him to sign it, refusing Medicare and return it. Well, he doesn't trust the US Postal Service and went to the office.

SS office told him that he can't refuse A. So I look like an ***.

As I said, I give up.

 

[goillini52]

And for today's "I give up" on this issue.

Client has been taking SS since age 62. Fully funds an HSA. Received his Medicare card with both A and B. Told him to sign it, refusing Medicare and return it. Well, he doesn't trust the US Postal Service and went to the office.

SS office told him that he can't refuse A. So I look like an ***.

As I said, I give up.

What were you smokin'? Sounds like some good sh*t!!!

 

[kstein]

If you are drawing Social Security, you are required to keep Medicare part A and can't disenroll from party. It's some weird prerequisite so even if they sign the back of the card they would still be enrolled into part A only and therefore not eligible to contribute to an HSA.

QUOTE="kgmom219, post: 1237153, member: 43390"]And for today's "I give up" on this issue.

Client has been taking SS since age 62. Fully funds an HSA. Received his Medicare card with both A and B. Told him to sign it, refusing Medicare and return it. Well, he doesn't trust the US Postal Service and went to the office.

SS office told him that he can't refuse A. So I look like an ***.

As I said, I give up.[/QUOTE]

 

[LostDollar]

Having a client is getting ready for Medicare but is worried about what he read on the social security retirement benefits PDF regaridng funding an HSA..

Client is worried about HSA contribution, I was under the impression that once you become eligible you should not contribute to an HSA. Many of us know this.

According to the booklet Social Security booklet they recommend to stop contributing to your HSA at least six months before you apply for Medicare. I thought the month of was fine to avoid the tax penalty on HSA contribution? Has anyone come across this? Client is thinking about delaying enrollment into Medicare for 6 months because of this.


Retirement Benefits from the 2018 Social Security:
To avoid a tax penalty, you should stop contributing to your HSA at least six months before you apply for Medicare.

https://www.ssa.gov/pubs/EN-05-10035.pdf

Does it happen to be a family HSA plan?