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by Yolanda Webb
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This article is meant to clear the air and any
misleading information concerning those eligible for Medicare whether due to
age or disability and their ability to continue to contribute to a Health
Saving Account (HSA).
An individual who is entitled (enrolled) into
Medicare is not eligible to contribute to a HSA. They may elect a HDHP that is
HSA compatible. The key term is “entitled,” which is not the same as the term
“eligible.” IRS Publication 969, IRS Notice 2004-50 and IRS Notice 2008-59
clarify that mere eligibility for Medicare does not make an individual
ineligible to contribute to a HSA and that a Medicare-eligible individual who
is not actually enrolled in Medicare Part A, B, D, or any other Medicare
benefit may contribute to a HSA until the month that he/she is enrolled in
Medicare.
Secondly, on a noteworthy side, remember that entitlement to Medicare Part A is automatic for some individuals because they have already applied for and are receiving Social Security, Railroad Retirement benefits or have been deemed Medicare Disabled. However, it is not unusual for a working older person to delay receiving Part B benefits until he/she terminates employment.
The employee is still eligible to contribute the full family contribution to the HSA as long as he/she is the HSA holder, is not enrolled in Medicare and is enrolled as other than single on the health plan. It doesn’t matter if the spouse is enrolled in Medicare—the maximum contribution is determined by how the employee is enrolled in the medical plan.
Final Year’s Contribution is Pro-Rata. You can make a HSA contribution after you turn 65 and enroll in Medicare, if you have not maximized your contribution for your last year of HSA eligibility. You have until April 15 of the year following the tax year you lose HSA eligibility to make your HSA contribution. You can do so even if you are no longer eligible for a HSA so long as you are making a contribution for a period when you were eligible.
Here is an example: Jim was covered by a self-only HDHP and eligible for a HSA in 2015, but turned 65 on July 2, 2015, and enrolled in Medicare. Jim lost eligibility for a HSA as of July 1, 2015. For 2015, Jim was eligible for 6 months of the year. The federal HSA limit for 2015 is $3,350 for individual enrollment, plus a $1,000 catch-up = $4,350. Accordingly, Jim’s calculation is 6/12 x $4,350. Jim’s max contribution for 2015 is $2,175. Jim has until April 15, 2016, to make this contribution.
Secondly, on a noteworthy side, remember that entitlement to Medicare Part A is automatic for some individuals because they have already applied for and are receiving Social Security, Railroad Retirement benefits or have been deemed Medicare Disabled. However, it is not unusual for a working older person to delay receiving Part B benefits until he/she terminates employment.
The employee is still eligible to contribute the full family contribution to the HSA as long as he/she is the HSA holder, is not enrolled in Medicare and is enrolled as other than single on the health plan. It doesn’t matter if the spouse is enrolled in Medicare—the maximum contribution is determined by how the employee is enrolled in the medical plan.
Final Year’s Contribution is Pro-Rata. You can make a HSA contribution after you turn 65 and enroll in Medicare, if you have not maximized your contribution for your last year of HSA eligibility. You have until April 15 of the year following the tax year you lose HSA eligibility to make your HSA contribution. You can do so even if you are no longer eligible for a HSA so long as you are making a contribution for a period when you were eligible.
Here is an example: Jim was covered by a self-only HDHP and eligible for a HSA in 2015, but turned 65 on July 2, 2015, and enrolled in Medicare. Jim lost eligibility for a HSA as of July 1, 2015. For 2015, Jim was eligible for 6 months of the year. The federal HSA limit for 2015 is $3,350 for individual enrollment, plus a $1,000 catch-up = $4,350. Accordingly, Jim’s calculation is 6/12 x $4,350. Jim’s max contribution for 2015 is $2,175. Jim has until April 15, 2016, to make this contribution.
The Center for Medicare Advocacy
is asking for Medicare beneficiaries or their loved ones to email the center
with any problems that may have occurred regarding appealing denied items or
services by a hospice agency at hospice@MedicareAdvocacy.org.
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