Calculating HSA contribution for the year I start Medicare

[BrianB]

On 9/1/2023 I will start Medicare. DW will remain on our HDHP thru the end of the year (and 9 months of 2024). My understanding is that for 2023 we can contribute based on the "family" limit until my Medicare start date, then DW can contribute as a "single" through the rest of the year. We both qualify for the $1000 catch-up addition to the limits. It's a little complicated because the family limit is not exactly 2x the single limit. This is my calculation:

(8/12) * (7750+1000+1000) = $6500 that is $3250 for me + $3250 for DW
(4/12) * (3850+1000) = $1616 that is $0 for me + $1616 for DW
Total = $8116

Am I calculating this correctly? We want to max out our contributions but don't want to get into the hassle of over-contributing and having to correct it later.

BrianB

 

[MichaelB]

On 9/1/2023 I will start Medicare. DW will remain on our HDHP thru the end of the year (and 9 months of 2024). My understanding is that for 2023 we can contribute based on the "family" limit until my Medicare start date, then DW can contribute as a "single" through the rest of the year. We both qualify for the $1000 catch-up addition to the limits. It's a little complicated because the family limit is not exactly 2x the single limit. This is my calculation:

(8/12) * (7750+1000+1000) = $6500 that is $3250 for me + $3250 for DW
(4/12) * (3850+1000) = $1616 that is $0 for me + $1616 for DW
Total = $8116

Am I calculating this correctly? We want to max out our contributions but don't want to get into the hassle of over-contributing and having to correct it later.

BrianB

Looks good to me.

 

[Montecfo]

Do you have two HSA accounts? Or just one.

 

[BrianB]

Do you have two HSA accounts? Or just one.

We have two, one in each of our names. I think that is the only way to get two catch-up contributions.

 

[MichaelB]

We have two, one in each of our names. I think that is the only way to get two catch-up contributions.

That’s how I understand it.

 

[Montecfo]

We have two, one in each of our names. I think that is the only way to get two catch-up contributions.

Yes. Just being sure since that trips folks up sometimes.

Looks right to me.

 

[audreyh1]

Because we contributed monthly, each to their own HSA account, this was pretty straightforward as we were also on individual insurance policies. DH’s last contribution was the month before he was Medicare eligible.

Yes, your catch-up contribution is prorated by the months before 65.

 

[Telly]

IIRC,
There was something about stopping your personal HSA contribution 6 months before starting Medicare. Anybody remember that? Did this requirement go away recently?

 

[audreyh1]

IIRC,
There was something about stopping your personal HSA contribution 6 months before starting Medicare. Anybody remember that? Did this requirement go away recently?

Never seen that. DH certainly didn’t and the tax forms didn’t flag a problem. My understanding is that HSA contributions must stop the month you become eligible for Medicare.

 

[Irishgirlyc58]

IIRC,
There was something about stopping your personal HSA contribution 6 months before starting Medicare. Anybody remember that? Did this requirement go away recently?

It’s my understanding that stopping HSA contributions 6 months prior to Medicare is for those who are still working and contributing to HSA past age 65 so when they apply for Medicare after 65 they could get retroactive MC for 6 months. So very individual circumstances.

I also start MC this September as well. I’m single so have determined that my prorated HSA contribution for this year is $3233- which is really close to the $3250 OP calculated. He gets slightly more because of the family contribution limit.

 

[Born2Fish]

On 9/1/2023 I will start Medicare. DW will remain on our HDHP thru the end of the year (and 9 months of 2024). My understanding is that for 2023 we can contribute based on the "family" limit until my Medicare start date, then DW can contribute as a "single" through the rest of the year. We both qualify for the $1000 catch-up addition to the limits. It's a little complicated because the family limit is not exactly 2x the single limit. This is my calculation:

(8/12) * (7750+1000+1000) = $6500 that is $3250 for me + $3250 for DW
(4/12) * (3850+1000) = $1616 that is $0 for me + $1616 for DW
Total = $8116

Am I calculating this correctly? We want to max out our contributions but don't want to get into the hassle of over-contributing and having to correct it later.

BrianB

Glad you posted! I start Medicare on Aug1. Not to hijack your thread but would my calculation be...

(7/12) * (7750+1000+1000) = $5687 that is $2843 for me + $2843 for DW
(5/12) * (3850+1000) = $2020 that is $0 for me + $2020 for DW
Total = $7707

DW = 3864 + 1000 (catchup) = 4864
Me = 2260 + 583 (catchup) = 2843

Total = $7707

 

[Trooper]

Rather than start a new thread, I am in a similar situation as the OP. I believe I have the calculations correct for our contribution amounts for 2023 and 2024.

	HSA Limits
	2023	2024
Self/Single	3,850	4,150
Family	7,750	8,300
Catchup (over 55)	1,000	1,000
Trooper on Medicare	2/1/23
DW On Medicare		7/1/24
	Contribution Limits
	2023	2024
Trooper	729	0
DW	5,175	2,575
Total	5,904	2,575

However we have only one HSA account, and it is in my name. Does DW need to open an HSA account in her name in order to maximize her contributions once I am on Medicare?

 

[SecondCor521]

However we have only one HSA account, and it is in my name. Does DW need to open an HSA account in her name in order to maximize her contributions once I am on Medicare?

You can split your total contribution any way you like between the two of you with the exception that after 55 catchup amounts (prorated as necessary) must go into each of your personal HSAs:

"The $1,000 additional contribution amount is not allocable among spouses, unlike the $7,750 family contribution discussed
below. For the Line 3 Limitation Chart and Worksheet, the additional contribution amount is included for each month you are an eligible individual."

-- page 5 of the instructions for Form 8889 at https://www.irs.gov/pub/irs-pdf/i8889.pdf

By the way, this is an after-55 thing, and so you should have been following this rule for the past 9 years or so. If you didn't, then you may have made an excess HSA contribution at some point, which would be sort of a mess to figure out now.

 

[audreyh1]

However we have only one HSA account, and it is in my name. Does DW need to open an HSA account in her name in order to maximize her contributions once I am on Medicare?

Yes, in order to get her $1000 catchup contributions for ages 55+ she need her own HSA account once she turns 55. Plus in order to be able to continue contributing for herself once you reach 65, assuming she remains on an HSA eligible insurance policy, she will need her own account as contributions to yours will no longer be allowed.

 

[big-papa]

We have two, one in each of our names. I think that is the only way to get two catch-up contributions.

Correct. You have to have separate HSA's. But that's as far as it goes. You have the choice to allocate the non-catch-up amount between the separate HSAs any way you want, including 100% in one and 0% in the other. That's basically what we've done as it was more conveneint. My HSA has the full family amount + catch-up and DW's has just the catch-up.

Cheers.

 

[Trooper]

You can split your total contribution any way you like between the two of you with the exception that after 55 catchup amounts (prorated as necessary) must go into each of your personal HSAs:
.
.
.
By the way, this is an after-55 thing, and so you should have been following this rule for the past 9 years or so. If you didn't, then you may have made an excess HSA contribution at some point, which would be sort of a mess to figure out now.

You had me worried for a minute, thinking I placed DW's catchup contributions in my account. But alas, either through dumb luck or whatever, I neglected to make catch-up contributions for her, so I think I am safe