(I tried asking the IRS but apparently right now they don't have anyone at all who's covering these questions). environment open to Thomson Reuters customers only. You take your number of eligible months and divide by 12, and then multiply that times your contribution limit. I was told that if you have a H.S.A. But if I contribute the maximum to my HSA before I become eligible for Medicare, and for that matter before I can even apply, why would I be penalized? Renee, once your husband has enrolled in Medicare, he is no longer eligible to make HSA contributions. I hope this helps! Do they also need to stop contributing to the HSA 6 months prior to her retirement or can those contributions continue without causing her any problems? Hi Chuck! Hi Kathy! You and your employer will need to end your HSA contributions up to 6 months before enrolling in Medicare since Medicare back dates your Part A coverage from the date you enroll. Learn how to compare the benefits, costs and pitfalls of the two Medicare paths. Hello! That means you would have six months of eligibility during 2022 to contribute to an HSA, so your contribution limit is 6/12 of $3650 +6/12 of the $1000 catch-up contribution amount for a total of $2325. An HSA (Health Savings Account) is a tax-exempt trust or custodial account you or your employer can establish to pay for or reimburse qualifying healthcare costs. You cannot give up this 6-month retroactive coverage. When you retire and enroll in Medicare, you can use your existing HSA funds to pay for health care services. You must remember to not overcontribute to your HSA for the six months before enrolling in social security or Medicare. -Frank. Save my name, email, and website in this browser for the next time I comment. Under current regulations, individuals who apply for Medicare Part A or Part B after reaching age 65 are automatically given six months of retroactive health coverage, which invalidates their ability to make or receive HSA contributions for any of those months they were deemed to be covered. But then, your reference to a 6 month lookback isconfusing,because the lookback only applies to peoplewho delay taking Medicare. Remember that either Medicare part A or part B makes you ineligible to contribute to your HSA. In that situation, the employee may receive up to six months of retroactive Medicare coverage for the period prior to the month in which application for benefits is eventually made. Stop funding your HSA six months before Medicare enrollment to avoid a tax penalty. If you continue to contribute to your HSA once you enroll in Part A, you will be penalized. Any contributions made after youre Part A is active will be considered excess contributions. According to the IRS, you cannot contribute to your HSA at all, this includes both employee and employer. Your session has expired. If employers have not already fielded questions about Medicare and HSA contributions, they should prepare to do so. However, they're going to have to do this before they file their income taxes for the year in which they make those contributions. Now I have HSA contributions to remove . But the rule change has not been taken up by the Biden administration. else if(currentUrl.indexOf("/about-shrm/pages/shrm-mena.aspx") > -1) {
The policy is not required by law but is regulatory and overseen by the Centers for Medicare and Medicaid Services [CMS]. Its your responsibility to prorate both your regular contribution and the catch-up contribution if applicable. If your Medicare Part A coverage overlaps when you or your employer made contributions, youll have to pay a tax penalty. This "6-month lookback" starts when you enroll in Medicare or begin your Social Security retirement benefits. You can use your HSA funds to cover qualifying medical costs. The excess contribution goes in Box 1, and earnings on excess contributions will be in Box 2 and included in Box 1. Sensible enough. I just want to be sure that stopping the HSA plan and enrolling in HRA plan will be sufficient time to avoid any penalties with HSA and Medicare. Before that I was on a high deductible health plan for the first six months. Hi Lauri! I was unaware that I would automatically be enrolled in Medicare part A retroactively 6 months. My husband does not contribute $$ to the account. Your email address will not be published. As long as you withdrew all your contributions, both your own and your employers, you should be able to avoid the excess tax. On youremployer group coverage, both you and your employer can contribute funds to your HSA. My husband is currently 65 as of Feb 2, 2022 so he applied for Medicare in November 2021, as that is what we have always been told and understood that at least 3 months before 3 months after turning 65 you should enroll in medicare as it is free and required. This limit also pertains to any period of retroactive Medicare coverage. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917, HSAs and Medicare: Diagnose the possible pitfalls. I have made almost $400 in contributions this month can I have my employer withdraw those funds from my HSA account to avoid the taxes on them? - Dwight D. Owned by: Elite Insurance Partners LLC. You can continue to contribute to the family amount. How will I recoup those payments?. Medicare enrollment, however, makes further contributions to an HSA impossible. Do I have to stop my HSA payments out of my paycheck and employer contribution for 2020 starting in November? Integrated software I turned 65 on 11/9/22, applied for Medicare in August 2022 and received an application approval letter from Medicare indicating my Hospital & Medical coverage begins 11/1/2022. As long as you have creditable coverage through your employer, you wont be penalized for delaying your enrollment. Nancy, to avoid paying a penalty, be sure to stop HSA contributions before enrolling in Medicare Part A. If you're age 60+, you probably have figured out how to use your health savings account (HSA) to help pay for qualified medical expensesand even save something extra for unanticipated health care expenses you may soon be facing in retirement. When you apply to social security, you are enrolling in part A as well. Please enable scripts and reload this page. It is the single reason I elected to go with Elite. HSA contributions should stop six months before the effective date of Social Security enrollment. Please confirm that you want to proceed with deleting bookmark. governments, Business valuation & of products and services. If you haven't yet enrolled in Medicare and have an HSA-eligible insurance policy, you can contribute at any time. (Jan to June of 2022) also the employer will contribute 500 in June and 500 in December will this be a problem? Is this something I would have to specifically request, or should I contact Medicare? consulting, Products & Either way, they have some record-keeping to go back and fix. Hi Frank! You would just need to submit your receipt to Medicare for reimbursement. Can I now make contributions for the period of time between September and 6 months ago (essentially for Sep., Oct., and Nov.) without incurring the tax penalty? Stop making contributions to your HSA up to 6 months before applying for Medicare Part A only or Part A and Part B or starting your Social Security retirement benefits. If I want to continue to contribute the family limit to my HSA, does he need to cancel his Medicare Part A plan by using the CMS1763 form? It is not a time limit; it is an amount limit. Home / FAQs / General Medicare / Medicare and Health Savings Accounts (HSA). If you apply for Medicare after 65, you are automatically considered enrolled six months before your enrollment request. Under current regulations, individuals who apply for Medicare Part A or Part B after reaching age 65 are automatically given six months of retroactive health coverage, which invalidates their ability to make or receive HSA contributions for any of those months they were deemed to be covered. Good lesson for others: dont listen to your friends or even Medicare. sign up for Medicare and join a plan before your job-based insurance ends. Can people choose to forgo the six months of retroactive Medicare coverage to avoid this issue? Download the FREE, Copyright 2012-2023, 65 Incorporated All Rights Reserved -. I signed up for Medicare last month (start 7/1/21). I also confirmed with Medicare that my effective date is 11/1/2022 and was not back-dated 6-mos. Learn more about working past 65 and Medicare. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676. Hi Chuck! Any deposits made on your behalf are illegal once you are enrolled in Medicare. Wouldnt this be tax free? For example, Id be writing the check today (inside the retroactive period) for a period prior to the start of the retroactive period. Otherwise, I understood you as saying earlier that the lookback won't come into force if I apply before July 1, and as it happens I'll have already contributed my maximum before that. Faye, once you are enrolled in Medicare Part A, you can no longer contribute to an HSA. It is important to understand that for Medicare part B (and D), you must sign up as soon as you are eligible, or you will have life-long penalties. Diane, thank you for reaching out. Hi Jack! I raised my question because Medicare's statement seemed to override the IRS's example and caused me to wonder what the IRS really requires. to receive guidance from our tax experts and community. Since Medicare is individual, and the HSA contributions are from your wife, your enrollment into Medicare will not impact her contributing to the HSA. Some discussions even say you must stop contributing six months before going on Medicare. You can take tax-free withdrawals from your Health Savings Account to reimburse the cost of premiums youve paid out of pocket. TT will ask whether you had Medicare at any time during 2022. 969) gives this example: "You turned age 65 in July 2020 and enrolled in Medicare. 6 months before applying for Medicare or Social Security benefits. If you turn 65 in April,then your effective date will be April 1, evenif you wait until July to sign up. If you apply for Medicare prior to your 65th birthday month, you can contribute to your HSA up until the day before your Medicare effective date. . IRS guidance regarding HSA eligibility does not make employers responsible for determining whether their employees are entitled to Medicare and thus ineligible for HSA contributions.
How Do Street Vendors Contribute To The Economy,
Nurse Aide License Verification Nj,
Articles W