Hello;
I am nearing the time I need to enroll in Medicare and my question concerns the transition from a health plan with an HSA to Medicare. It is really clear that you can not contribute to an HSA if you have any health insurance that is not a high deductible plan - which includes Medicare. What I would like to nail down is exactly when I need to stop making HSA contributions.
Looking at various HSA websites, I came to the following understanding:
Assuming I start medicare A and B on Oct 1, I should not make contribs after Sept 30. If I do, then IRS would require that I withdraw those contribs and pay reg income tax on that amount. The second issue for the IRS is the amount of contributions - since I would be eligible to make contribs for only part of the year, I can only make a pro-rated amount of contribs. If I exceed that amount, I would need to withdraw the excess or face penalties.
So it looks like I could contribute $3,975 ([$4,300 + $1,000 catchup] / 12 * 9] before Sept 30 without penalty. Not that I ever have done that much in the past but you never know.
Can someone verify this? Or know someone who can?
Sincerely;
Michelle
