I do my own taxes, but have run up against a toughie.
My wife recently passed away. I am 66 years old as of August 2020. Social Security said that I am eligible for survivors benefits of $932/month. But, to accept those benefits, I must sign up for Medicare. I currently work (and will continue to work) for a company with 100,000 employees and have a Health Savings Account (HSA) and high deductible health plan (HDHP). According to the IRS & Medicare, I can't sign up with Medicare unless I remove 6 months of contributions to the HSA account. And therefore, I cannot accept the survivor's benefit because it automatically signs me up for Medicare. My question is what are the steps to legally remove this money from my HSA so I can accept the SS benefit and sign up for Medicare?
I have stopped all contributions as of March, and must somehow remove my contributions, and my employer's contributions for the last 6 months. Medicare Part A has a gotcha: I receive up to six months of retroactive coverage, not going back farther than my initial month of eligibility. If I do not stop HSA contributions at least six months before Medicare enrollment, I will incur tax penalties as long as the contributions exist.
In this chart, I forgot to think about the $1200 my employer contributed last year. So that is another $300 ($100/month for 3 months) that must be removed. Which will be hard, because the balance in the HSA is $2473.31. And so I would need to remove $1269.28 (my 6 month contributions) + 1200 (my employer's 2021 contribution) + 300 (my employer's 2020 contribution for 3 months) = $2,769.28.
