HSA contributions just before Medicare enrollment

[lem1955]

I am 64 yo. I turn 65 in May, 2020. I'm on an HSA compatible individual health plan in 2019 and contributed my whole year's $4500 at the beginning of 2019. I just read that people should stop contributing to HSA's 6 months prior to enrolling in Medicare in order to avoid paying a tax penalty because Medicare Part A has a six month look back period. So it's clear that I should not enroll in an HSA plan for 4 months in 2020. Will I have to pay a tax penalty for Nov and Dec contributions to the HSA? Or even more time if I begin my application process in December or January? How much will the tax penalty be? Researching Medicare stuff is driving me bananas. Makes me think I want to set this up so I don't ever have to look at it again.

 

[SevenUp]

I just read that people should stop contributing to HSA's 6 months prior to enrolling in Medicare in order to avoid paying a tax penalty because Medicare Part A has a six month look back period. So it's clear that I should not enroll in an HSA plan for 4 months in 2020.

Might seem clear but it is incorrect. The medicare.gov web site could be much clearer - see Medicare Part A Retroactive Coverage and HSA's | HSA Edge for a better explanation>

In short, as long as your birthday is not 1-May, you can make 2020 HSA contributions for 4/12 of the year. Again, see the linked article for details.

 

[Bir48die]

This was discussed last week. Last response is correct

 

[lem1955]

Thanks so much! I'm sorry I missed the discussion last week. I should know to always start with this forum. I get the best information fastest here.

Might seem clear but it is incorrect. The medicare.gov web site could be much clearer - see Medicare Part A Retroactive Coverage and HSA's | HSA Edge for a better explanation>

In short, as long as your birthday is not 1-May, you can make 2020 HSA contributions for 4/12 of the year. Again, see the linked article for details.

 

[Bogie]

HSA late year contribution

I made our HSA contribution yesterday for the wife and I. She started Medicare in March so I contributed two months of HSA for her and the full year for me since I'm not on Medicare until 2021. So, if I read the link correctly, I discovered I can't contribute anything to the HSA for the wife since she isn't in the HSA anymore. I could have contributed two months for her but would have needed to do it before March 1. This apparently created an excess contribution so I transfered the excess contribution back to my taxable account. Thanks for starting this thread. Wish I had seen it a couple of days earlier.

 

[mn54]

I made our HSA contribution yesterday for the wife and I. She started Medicare in March so I contributed two months of HSA for her and the full year for me since I'm not on Medicare until 2021. So, if I read the link correctly, I discovered I can't contribute anything to the HSA for the wife since she isn't in the HSA anymore. I could have contributed two months for her but would have needed to do it before March 1. This apparently created an excess contribution so I transfered the excess contribution back to my taxable account. Thanks for starting this thread. Wish I had seen it a couple of days earlier.

this is not my understanding. You can contribute the 2 months of HSA for your wife. the deadline for contributions is the filing date for your taxes.

 

[Bogie]

https://www.hsaedge.com/2017/03/17/medicare-part-a-retroactive-coverage-and-hsas/
"The short answer to the above question is “nothing good”. First things first, we need to make clear the requirements for being able to contribute to a Health Savings Account. Note that these requirements are for new contributions only; once you successfully contribute to an HSA, the funds they are yours forever. However the key word in that sentence is “successfully”, as you must be HSA eligible for the contribution to be valid"


You are probably correct but I decided to err on the side of caution.