Forced to have an HSA while on Medicare Part A

For year 2011 my company only had one option for health insurance, High Deductable with a Health Savings account automatically deposited $750 into the account by the company and another $1200 later that year. I tried ALL YEAR to get Medicare to take me off medicare part A and they never did. I sent 3 letters with form 1763 filled out requesting I be taken off Medicare and made numerous phone calls to them,  they SAID they would disenroll me but Their web site says I am still enrolled.  What is the IRS going to do when I file this year?
  • I'd bet dollars to doughnuts that nobody here knows the answer to that question and that's why you're not getting an answer.  While there are a few tax "pros" among the volunteers who lurk here I'll bet no one has come across this issue and would feel comfortable answering.

    I think your best bet - and a long-shot at that - would be to pick up the phone and call the IRS.  If you can, try and work up the food chain as the front-line IRS folk undoubtedly don't know the answer, either.  You might want to wait until the filing deadline and maybe even extend your filing until October to get this cleared up.  Government bureaucracy is not the most responsive institution around, and even though you're listed as being on Medicare in January, 2012 they might retroactively drop you to whenever you first called them in 2011.

    Good luck.

    Tom Young
Doesn't sound like a bug to me.  If you are on Medicare Part A and also on a HDHP in any month, you do not qualify to put money in an HSA that month.  Period.  That's the law.  So if money was put into the HSA for such months withdraw it to avoid overcontribution penalties each year until you do withdraw it.
    I would consult with a local tax pro (EA or CPA specializing in individual income tax).  I would explore taking all the money out of the HSA as a withdrawal of excess contributions.  Of course it would be subject to income tax,  which is fair since it was never taxed, but I think this would avoid any penalties.  That would need to happen before April 15.  Might be worth a phone call to the HSA trustee to discuss.
    • Was it an HSA or a "health reimbursement account" (HRA)?  Except for some small employers, generally employers *cannot* force their employees on Medicare into an HSA/HDHP due to the so-called "Medicare secondary payer" (MSP) law, which among other things prohibits most employer health plans from discriminating against Medicare-eligible active employees (NOT retirees).  However, many HSA/HDHP plans (most notably the ones offered in FEHB to Federal employees) allow you to elect an HRA in lieu of an HSA to comply with MSP.  If you're on Medicare, your employer should have paid its contributions into an HRA, *not* an HSA.

      The main difference between HRAs & HSAs, at least for now, is that while there is *NO* limit on HRA contributions, *ONLY* employers can contribute to HRAs.  Also, HRAs are "hypothetical" accounts (similar to flex spending) that do NOT have to be funded up-front, unlike HSAs (trustee-controlled bank or investment accounts similar to IRAs).
    I retired at 62 and started taking Social Security at 63.  I tried very hard to avoid Part A (letters and phone calls) so I could continue contributing to HSA. Finally discovered via a personal visit that there is a reg that says if you've taken SS benefits for X time (I can't remember the length of time), the only way you cannot be enrolled in Part A is to pay back all your SS benefits. Yet another stealthy way for the proto-socialists to increase the dependence on govt of those trying hard to take care of themselves.

    Meanwhile, was the much discussed early 2011 TT bug on not allowing entry of both HDHP and Medicare in the TT form ever solved?  How?  It still seems to exist.
    Judith 46
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