When you indicate to 2023 TurboTax in the HSA section that there was Medicare coverage for October through December, TurboTax will calculate the maximum permissible contribution based on only 9 months of qualifying coverage and will treat anything over that as an excess contribution that TurboTax will automatically add to 2023 taxable income.
HSA custodians should calculate the attributable earnings, but some decline to do so, require you to do the calculation and just distribute and report on Form 1099-SA (a code-2 2024 Form 1099-SA in this case which will likely combine the distributions for the two returns of excess contributions) the amount that you yourself determine to be the attributable earnings. This would be done the same as was done for the return of the excess contributions made for 2024. If the HSA custodian forces you to do the calculation, you should be able to determine the interest rate from the information on the monthly HSA statements and determine how much the October, November and December contributions earned.
The tax code requires that the attributable earnings be reported on the tax return for the year in which the earnings were distributed. As I said above, in this case the form will be expected to combine the two returns of excess contribution on a single 2024 Form 1099-SA to be reported on your 2024 tax return.
