ziggy29
Moderator Emeritus
Last year I started a thread about "Financial Malpractice Radio" -- a local radio talk show host who does a Saturday afternoon show about money matters who was getting some basic things horribly wrong (such as stating he thought last year's $15,500 401K contribution limit was per employer and not per individual). He had been pretty good lately, but man, he really blew it again today.
A caller today recently turned 65 and became eligible for Medicare and he has had an HSA for a few years with a few thousand dollars in it. The caller mentioned he heard he couldn't use the HSA for Medicare premiums (wrong!) and asked if he should withdraw the money from the HSA and pay taxes on it. The host asked if the caller saw himself in a lower tax bracket in the future (by itself a good question under different circumstances). The caller said "no" and the host said he saw no reason not to pull it out and pay the tax!
Hello? Even if Medicare PREMIUMS weren't payable tax-free from the HSA (which is wrong), copays and deductibles ARE. As are OTC medicines and some medical supplies you buy at the drug store. Tax-free. Yes, even when you're on Medicare. But instead, the host is saying "go ahead, take it out and pay the taxes on it."
What's worse is that you CAN pay your own Medicare premiums with an HSA tax-free; the one restriction is that the IRS has ruled that an under-65 spouse can't pay the Medicare premium for an over-65 spouse from their HSA. And he took the caller at face value that he couldn't use the HSA to pay Medicare premiums -- which, IMO, a decent financial planner should know or at least research before giving the answer if they don't know.
In short, someone may be eating a lot of taxes unnecessarily.
I'm starting to feel like I'm in the wrong line of w*rk.
A caller today recently turned 65 and became eligible for Medicare and he has had an HSA for a few years with a few thousand dollars in it. The caller mentioned he heard he couldn't use the HSA for Medicare premiums (wrong!) and asked if he should withdraw the money from the HSA and pay taxes on it. The host asked if the caller saw himself in a lower tax bracket in the future (by itself a good question under different circumstances). The caller said "no" and the host said he saw no reason not to pull it out and pay the tax!
Hello? Even if Medicare PREMIUMS weren't payable tax-free from the HSA (which is wrong), copays and deductibles ARE. As are OTC medicines and some medical supplies you buy at the drug store. Tax-free. Yes, even when you're on Medicare. But instead, the host is saying "go ahead, take it out and pay the taxes on it."
What's worse is that you CAN pay your own Medicare premiums with an HSA tax-free; the one restriction is that the IRS has ruled that an under-65 spouse can't pay the Medicare premium for an over-65 spouse from their HSA. And he took the caller at face value that he couldn't use the HSA to pay Medicare premiums -- which, IMO, a decent financial planner should know or at least research before giving the answer if they don't know.In short, someone may be eating a lot of taxes unnecessarily.
I'm starting to feel like I'm in the wrong line of w*rk.
