My TurboTax rockstar friends,
I would love your insight into my "that's so 2020!" situation, below.
Facts:
So...I have a few questions:
Thanks for your help and wisdom, my rockstar TurboTax friends!
NoviceTaxLearner
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If you were covered by Medicaid on 12/1/2020, you are ineligible to make an HSA contribution (or have one made on your behalf) for 2020 because you will have had disqualifying coverage the entire year. The law is explicit on that. I don't see how saying that you didn't want or need the December Medicaid coverage would change the fact that you were covered, making you HSA ineligible for December.
Unless the employer can undo the $2,000 HSA contribution before the end of the year, it's likely that you'll need to obtain a return of excess contribution from the HSA before the due date of your 2020 tax return.
If you were covered by Medicaid on 12/1/2020, you are ineligible to make an HSA contribution (or have one made on your behalf) for 2020 because you will have had disqualifying coverage the entire year. The law is explicit on that. I don't see how saying that you didn't want or need the December Medicaid coverage would change the fact that you were covered, making you HSA ineligible for December.
Unless the employer can undo the $2,000 HSA contribution before the end of the year, it's likely that you'll need to obtain a return of excess contribution from the HSA before the due date of your 2020 tax return.
Thanks, @dmertz.
The odd thing is that I never asked to be on Medicaid, nor applied to be on Medicaid. It just automatically happened due to my Marketplace health insurance application during a COVID year and I actually asked to not be on Medicaid a full week prior to 12/1/20.
So something from the county about the error wouldn't help?
you're out of luck. The rules make no exceptions for "accidental" coverage.
you do have the option to request an IRS Private Letter Ruling. It is expensive and you need a pro to prepare one. there is no guarantee the IRS would rule in your favor.
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