Tax benefit to HSA contributions while retired?

[Trooper]

I'm trying to determine if there is any reason NOT to contribute to our HSA during FIRE. For example, one cannot use an HSA to pay for healthcare premiums, until age 65. However, at age 65 it can be used for Medicare Part B, Part D and Medicare Advantage premiums.

A couple of other age-65 points that I have not seen mentioned may be relevant for some:
- Because Medicare is not an HDHP, you cannot contribute to your HSA if you are enrolled in Medicare. You can still withdraw from your HSA at age 65 and beyond.
- All HSA distributions after age 65 are penalty free, even if the funds are not used for qualified health expenses. However, if you take a distribution that is not used for qualified medical expenses, it will be taxable. Therefore it's like an IRA for non-medical withdrawals at 65.

 

[Gotadimple]

I'm trying to determine if there is any reason NOT to contribute to our HSA during FIRE.

The only reason I can see would be if cash was tight in a given year, and one chose to forego the contribution. Hopefully, that wouldn't be the case, but emergencies do happen.

- Rita

 

[audreyh1]

The only reasons I can think not to contribute to an HSA during FIRE is: you don't have an insurance plan that allows contribution to an HSA or you don't have the funds to spare (not so likely for someone who is FIREd).

 

[homestead]

I just made my HSA contribution for 2017 yesterday. Next year I only have 2 months of healthcare until my Medicare starts , can I make the 2018 HSA contribution during those two months or does one need to have a full 12 months to contribute?

 

[MichaelB]

I just made my HSA contribution for 2017 yesterday. Next year I only have 2 months of healthcare until my Medicare starts , can I make the 2018 HSA contribution during those two months or does one need to have a full 12 months to contribute?

Yup. You can contribute a pro-rated amount based on the number of months you were covered, including the add'l catch up for age 55 and over.

 

[audreyh1]

I just made my HSA contribution for 2017 yesterday. Next year I only have 2 months of healthcare until my Medicare starts , can I make the 2018 HSA contribution during those two months or does one need to have a full 12 months to contribute?

HSA contributions are considered month-by-month, just like paying your health insurance, so you can contribute for those 2 months that you are still paying your old health insurance.

 

[homestead]

HSA contributions are considered month-by-month, just like paying your health insurance, so you can contribute for those 2 months that you are still paying your old health insurance.

Thanks Michael and Audrey
I always made a single yearly HSA contribution and remembered when I did my taxes it always asked if my HSA was for an entire year.

So it looks like I can contribute a total of $733 for those two months.

 

[audreyh1]

Thanks Michael and Audrey
I always made a single yearly HSA contribution and remembered when I did my taxes it always asked if my HSA was for an entire year.

So it looks like I can contribute a total of $733 for those two months.

Yes, you can always contribute after the fact but no later than April 15 of the following year or when you file your taxes if sooner. And make sure the contribution is labeled with the correct year.