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How do I split HSA expenses between pre-and post medicare?

split happened mid-year. can i continue to put money into this fund(I don't use it for investment, just parking $$$) to keep all itemizable/approved expenses in 1 place?
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3 Replies

How do I split HSA expenses between pre-and post medicare?

I don't understand your question the way you worded it.  Contributions to an HSA and reimbursement for expenses have two completely different sets of rules.

 

Your eligibility to contribute to an HSA ends when you enroll in Medicare or any other insurance that is not a qualified HDHP.  HSA eligibility is based on your coverage as of the first day of the month.  If you were enrolled in Medicare on June 1, then you are eligible for the HSA for 5 months, and your contribution limit would be as follows:

If you have a single HDHP, your limit is $3650 divided by 12 x 5 months = $1521 plus $1000 catch up (for over age 50) divided by 12 x 5 months= $416 for a total of $1937.

If you have a family HDHP, your limit is $7300 divided by 12 x 5 months = $3042 plus $1000 catch up (for over age 50) divided by 12 x 5 months= $416 for a total of $3458.

 

You can contribute any time during the year, even after enroll in Medicare, but only up to your limit as calculated above.

 

Once you have money in an HSA, you can use it to reimburse any out of pocket medical expense for you, your spouse or your dependents, no matter what kind of insurance coverage you have. 

 

How do I split HSA expenses between pre-and post medicare?

If your contribution exceeds the limit, you are hit with a penalty every year until the excess (and earnings thereon) are removed. if you are going to withdraw the excess contact the administrator so the proper amount is withdrawn and it files the proper tax forms.  the penalty is based on the lesser of the excess contribution or the value of of the HSA account at yearend.   

How do I split HSA expenses between pre-and post medicare?

@Mike9241 

If the taxpayer has contributed an excess amount already in 2022, it is not actually necessary for them to perform the special procedure to withdraw excess contributions.  The taxpayer can simply withdraw the excess amount and not use it for medical expenses. Because they are age 65, withdrawals not used for medical expenses are subject to regular income tax but are not subject to the extra 20% penalty. And withdrawing money and not using it for medical expenses will have the effect of clearing the excess contribution.

 

Of course, any taxpayer under age 65 who makes an excess contribution must use the special procedure to withdraw the excess amount, not a regular withdrawal.

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