I still have a HDHP but TT thinks my coverage lapsed.

[ghsutton3]

I have the HDHP insurance, and I have the HSA. TT questions (2024 tax return)

1. Did you have any medical expenses in 2024?  Answer: Yes

2. What type of HDHP did (Frank) have on December 1, 2023? Answer: Family

3. Did (Frank's) HDHP coverage lapse in 2024 due to disability? [It did not lapse, I still have the employer-provided coverage]

I did stop contributing to my HSA because I enrolled in Medicare and had to stop contributions. But why would TT think my coverage lapsed?

I can't really proceed because coverage did not lapse and there's no option to indicate I still have coverage.

Any help appreciated!!

[BillM223]

Did you go on Medicare sometime in 2024?

If so, then TurboTax knows that you stopped having HDHP coverage (HDHP coverage with a conflict like Medicare is the same as no HDHP coverage). When you answered the question "What type of HDHP coverage did (Frank) have on December 1, 2023?" you probably answered Family.

TurboTax automatically applies the "last-month" rule for anyone who had HDHP coverage on December 1st. The "last-month" rule allows you to use the full annual HSA contribution limit, even if you had HDHP coverage for less than 12 months. 

So when you answered "Family" to that December 1st question, you told TurboTax that you had HDHP coverage in 2023, that you used the last-month rule, but did not have HDHP coverage for all of 2024 (a requirement to using the last-month rule).

In your case, you will says that the coverage "lapsed" (because you signed up for Medicare) not for a disability, but you will then answer a series of questions designed to elicit how much you should have been able to contribute in 2023 if you did not use the last-month rule.

Although you will read elsewhere (even from me) that taxpayers to whom this question does not apply should answer NONE, in fact, this question does apply to you.

So, ignore the "lapse" word, and just go through the rest of the HSA interview.

[ghsutton3]

Thank you!

So actually I messed up in 2023 and 2024. I had to sign up for Medicare in mid-2023, but did not stop my HSA contributions. The contributions continued until mid-2024 when I came to realize I was supposed to have stopped contributing when I signed up for Medicare.

So now, I am taking a distribution before April 15 from my HSA due to my excess contributions.

I don't know the best way to handle this, but at the moment I just want to get through the interview in TurboTax, so I'll re-read what you advised, and try to re-do the interview.

I really appreciate your thoughtful reply!