According to the IRS publication, after age 65 HSA contributions can be made without the need to use for medical. Turbo Tax included the funds in "other income". My understanding there was to be no tax consequence. Can you clarify?

The funds to the HSA were all my funds and not employer funds.
    Cancel
    You must mean distributions, not contributions.  After age 65 any amount of the distribution not used to pay for qualified medical expenses of the account beneficiary, spouse or dependents is included in gross income but is not subject to an additional 20% tax--the penalty in 2011.
      Cancel
      My understanding was that after age 65 you could use HSA funds for any purpose, just like IRA funds...correct or no?

      Also, is there any provision for making CONTRIBUTIONS after age 65?
        Cancel
        Jim--If you use the funds for qualified medical expenses you are not taxed on that distribution.  If you spend it on OTHER than those expenses you will be taxed on it.  Since you are on Medicare at age 65 you can no longer contribute to an HSA since you cannot have a HDHP if you are on Medicare.
        • Gayleg, I am a health insurance broker.  There is some misinformation in the above answers.

          1)  Everyone is enrolled in Medicare Part A automatically when they turn 65.  You CAN opt out of part A if you want, but it is difficult and there are possible future penalties for doing so.  If you are able to opt out of part A, you CAN continue to contribute to an HSA tax free as long as you are enrolled in an HDHP regardless of age.

          2) Anyone, even those enrolled in Part A Medicare, can be enrolled in an HDHP insurance plan.  If you are over 65, enrolled in this type of plan, and enrolled in Part A Medicare, you can no longer contribute to the Health Savings Account.  You can still stay enrolled in that insurance policy as long as you wish however.  

          3) Once you turn 65, even though you can no longer contribute, you can still use the leftover money in that account.  If you spend that money on qualified medical and dental expenses, it stays tax free.  If you take the money out in cash or spend it on something that is not qualified (vacation, new car, home improvements, etc.) it will be taxed as normal income, you just won't be penalized in addition to that.

          I hope this helps.
        Cancel
        Contribute an answer

        People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

        1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
        2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
        3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
        4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
        5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.
        Cancel