65 Medicare Part A and HDHP with HSA?

[jdhaletx]

I'm currently employed and enrolled in our company's HDHP with an HSA. I turn 65 last August and enrolled in Medicare Part A as I was told that I was required to do.

In preparing our 2024 taxes with TurboTax, I discovered that when I enrolled in Medicare Part A, I should have stopped contributing to the HSA.

However, the HSA (pre-tax) contributions continued.

I relize the pre-tax HSA contribution must cease. And, I probably need to pay taxes on the HSA contributions made in Sept, Oct, Nov and December 2024.

I have the following questions I hope that you'll be able to help with:

1. How, using TurboTax, do I include the HSA contributions from Sept - Dec in my 2024 taxes?

2. Now enrolled in Medicare Part A; Am I still able to enroll in the HDHP plan without the pre-tax HSA contributions?

3. Can I make post-tax contribution (transfer funds) to my HSA account?

Thank you in advance.

[KrisD15]

1. The program will ask if you had Medicare, you will answer "YES". Next the program will ask for the type of coverage and if you had Medicare by month. Select Medicare for September through December. The program will determine the treatment of the contributions made Sept-Dec.

The program will tell you what you need to withdraw before April 15, 2025. 

Ask the administer about any earnings attributed towards the excess and withdraw that as well. 

2. Yes, you can still have a HDHP when you also have Medicare

3. No, there is no longer an ability to fund your HSA account. 

You may continue to take distributions from the account until depleted.

You could contribute to a Roth account and get a similar result as contributing post-tax dollars into an HSA (if you could contribute to your HSA, but you can't) 

[dmertz]

If you reached age 65 in August, your Medicare Part A coverage began August 1, so with regard to the HSA you are also an ineligible individual for August.  You'll need to mark August as being covered by Medicare.  This means that you have only 7 months of eligibility and your contribution limit for the year is 7/12 of what you would otherwise be eligible to contribute.

You have until April 15, 2025 to make HSA contributions up to 7/12 of the normal annual limit.  Of course if you have already exceeded that, you have an excess that needs to be returned to you by the due date of your 2024 tax return, including extensions, rather than making additional contributions for 2024.  (If you are married and your spouse also contributes to an HSA, the amount your spouse contributes to your spouse's HSA can potentially affect the amount that you are eligible to contribute if either of you have family HSA coverage.)

[mb137]

Can I get clarification on when Medicare Part A begins? I was under the belief that Medicare Part A is retro to 6 months from the time you enroll when you turn 65 or older if you delay enrollment. So, in this example shouldn't February to July also be marked to Medicare also?

thanks in advance

[dmertz]

https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start

In particular, look at the paragraph titled "Signing up for premium-free Part A later."

[gmggarcia]

where is the program response to questions concerning HSA and Medicare in the final tax prepared tax  documentation? thanks.

[RobertB4444]

If you answered the questions correctly during tax preparation then your answers were used to make sure that the program calculated correctly.  If it is allowing you the HSA deduction then it is calculating everything just fine and the forms themselves inform the IRS that you are claiming to be covered by an HDHP.  

The IRS may still request proof of this so make sure to have all the necessary documentation in your records.

@gmggarcia 

[Opus 17]

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@gmggarcia wrote:

where is the program response to questions concerning HSA and Medicare in the final tax prepared tax  documentation? thanks.

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What exactly is your question?

If you had contributions or withdrawals to an HSA, your return will contain a copy of form 8889.  (If you are married and your spouse also has an HSA, there will be a separate form 8889 for your spouse.)

Your coverage for 2024 is indicated on line 1, and your contribution limits on line 3 and 7.  The limits take into account your answers about how many months you were eligible (had HSA-eligible coverage and were NOT covered by medicare or other insurance.)

The actual answers to your questions (used to calculate form 8889) are on an internal program worksheet that you might be able to see if you print or view the PDF for "all forms and worksheets" -- but might only be visible if you use the desktop program to look at the worksheets.