65 Medicare Part A and HDHP with HSA?

[steve8964]

My wife is currently employed and has HDHP Self plan with her employer. She has an HSA account which she stopped contributing to in April 2025. She is continuing to work. She signed up for Medicare A in November 2025 when she turned 65. Does she answer YES to the question "was she 65 when she received this distribution?"

Does she select she had Medicare (applied in Nov 2025) when it asks, “Did any of these apply?”

Does she select she had different plans in 2025?  She signed up for Medicare A in Nov 2025. So I assume she shows "Self" January thru October 2025 and "Medicare" for Nov & Dec?  She still has a HDHP Self plan but no contributions to the HSA after March 2025.

For 2024, she had "Self" plan for whole year 2024, but TT shows Jan 2024 "None", even though I put it in every month as Self. No matter what I do it won’t change. Is this a Software bug? How do I file with it showing None in Jan 2024 or does it matter?

Thanks

[BillM223 · Accepted solution]

1. Does she answer YES to the question "was she 65 when she received this distribution?" If she received a 1099-SA reporting on a distribution, then yes/no depends on her age on when she received the distribution. This is on a day-by-day basis. This makes a difference only if she received a distribution for reasons other than medical expenses (20% penalty), because the penalty is suspended if (1) she was 65 when distributed or (2) the distribution was for qualified medical expenses.

2. Does she select she had Medicare (applied in Nov 2025) when it asks, “Did any of these apply?” on the screen, "Do any of these situations apply to [name]?", answer 'yes' because she started Medicare in 2025.

3. Does she select she had different plans in 2025?  Yes, she had Self-only in some months and Medicare in other months.

4. For 2024, she had "Self" plan for whole year 2024, but TT shows Jan 2024 "None", even though I put it in every month as Self.  - this is a current issue we are dealing with, and it may potentially matter a lot (or not at all - depends). Are you using the desktop product? If so, then go to Forms (upper right) and find form 8889-S on the left (I am assuming that you are the primary taxpayer (8889-T) and your spouse is 8889-S). Please find line 18b1, and change January's insurance to "Self". Then don't touch the step-by-step page which fills in this screen. Before you file, you may need to check the Forms screen to make sure that this entry is correct. 

[steve8964]

Thanks for the answers BillM223. Your answers are what I thought as well, but I wanted to make sure I was on the right page.

In regards to answer (1), I will have to ask her the timing of her distirbutions for 2025, most of them were before she turned 65 in Nov, but there may have been some in Nov & Dec.  However, all of her distributions were 100% for qualified medical expenses. So, I am assuming that if she had any of these ditributions in Nov/Dec then we would check "yes" that she was 65,  But if all of them were before she turned 65 we would answer "No".

Questions (2) & (3), I had alreaady entered as you stated, so we are good there.

Question (4), I will go in and finish inputting all her HSA info, and then go to Forms at the end and correct the Jan 2024 box to "self".  I am using the Desktop poduct.  I will then save as a PDF all forms and check to see that her 8889-S Form shows it correctly before I send it in electronically. She has been on a HDHP Self Plan since I went onto SS/Medicare 7 years ago.

Thanks for you help

Steve 

[BillM223 · Accepted solution]

Because all of her HSA distributions were 100% for medical expenses, it won't matter whether or not they were made before she turned 65 or not - they will all be allowed tax-free.

It makes a difference only if there was an HSA distribution that was not for qualified medical expenses - there would be a 20% penalty in that case. But once you turn 65, the HSA becomes like a funny IRA - when you withdraw dollars, you owe only normal income tax and no penalty. Of course, the HSA is a "magic" IRA because any distributions will always be tax-free when made for qualified medical expenses, no matter the age.

As for the workaround, I would advise you to check form 8889 just before filing, to make sure that January is labelled correctly on line 18 - do this in Forms mode, not using the Step-by-step interview.

[steve8964]

Thanks for you help BillM223. Hopefully I will do all the entries OK.  I'll let you know if I have any other questions.

Steve

[steve8964]

Just a follow up BillM223, she had HSA distributions June, July, Sept, Oct before she turned 65, and distributions in Nov and Dec after she turned 65 and they were all for qualified medical expenses. So in the TT interview question should she answer "yes" or "no" to the question on was she 65 when she took this distribution?

[DianeW777 · Accepted solution]

Yes, she did take some distributions after turning 65 so you can answer 'Yes' to the question.  As indicated by @BillM223 regardless of her age when distributions were made, they were all for medical purposes and will not be taxed.

@steve8964 

[steve8964]

Thanks DianeW777 for your reply.