@LabyrinthMike --
"Should I just zero out my HSA balance?"
No, you don't have to "zero out" your HSA account after you enroll in Medicare. You can still use your existing HSA funds to pay qualified medical expenses. In fact, once you reach age 65 you can use your HSA funds to pay the premiums for Medicare Parts A, B and D and Medicare Advantage plans (but not for Medicare supplemental insurance such as Medigap).
What you can't do once you enroll in Medicare is contribute new funds to your HSA. If you do, those will be considered "excess contributions."
Excess contributions aren’t deductible. Excess contributions made by your employer are included in your W-2 gross income. If the excess contribution isn’t included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Generally, you must pay a 6% excise tax on excess contributions.
You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions:
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You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.
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You withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
