HSA

Forum|Forum|2 years ago
December 29, 2023
8 replies
50 views

HSA - My employer and I contributed $1500 after I applied for Medicare Part A. How do I calculate my tax liability and penalty for nit stopping contributions on time?

Not A Product Question

AmeliesUncle

Level 15

Let's back up a bit. There isn't necessarily a problem for contributing after you get Medicare. The problem is that getting Medicare (or other non-qualifying health insurance) changes the amount you are allowed to contribute for the year.

When exactly did Medicare start? How much was contributed to the HSA for the year?

Zzz2024Author

Level 2

Medicare says my start date is Dec 2022 and my employer and I contributed around $1500 in 2023. I also used it all on medical expenses in 2023.

AmeliesUncle

Level 15

@Zzz2024 wrote:
Medicare says my start date is Dec 2022 and my employer and I contributed around $1500 in 2023. I also used it all on medical expenses in 2023.

The HSA will be taxable (so if it was subtracted from your W-2 income, it will be added to your tax return).

Are you saying your HSA balance at the end of 2023 is $0? If so, there won't be any penalty.

TurboTax should correctly handle this situation. Just answer all of the questions about the HSA and it should handle it all correctly.

Mike9241

Level 15

there is another tricky rule if you applied for Medicare after reaching 65. There is a six-month lookback period (but not before the month of reaching age 65) when enrolling in Medicare after age 65. Note that the month of application is what is used to calculate the six-month lookback, not the month the applicant wishes to begin benefits

Mike9241

Zzz2024Author

Level 2

So, here's where I went wrong. My intent was to start receiving SS benefits at age 68 (born Jan 1956). I started my application in June 2023 (just to learn what I'd need to complete) but did not submit until Oct 2023 hoping to start receiving SS in Jan 2024. They backdated to Dec 2022 (6 months from start of application, not 6 months from application submission. It's all my misunderstanding of some illogical rules not shared properly by IRS or Social Security. So, what will my tax liability and penalty be. Will the contributions just be taxed as income plus 6% penalty on the amount disupursed for medical bills?