HSA and delayed Medicare Enrollment
This is you:
- You have turned 65.
- You have delayed enrollment in Medicare because you are still working and eligible for health insurance from your employer and you judge that your employer’s plan offers better coverage for the money.
- Your health plan is compatible with a Health Savings Account, and you are making regular “triple-tax” advantaged contributions to your HSA. (Triple taxed advantaged because you don’t pay taxes on the contributions, the interest earned OR the withdrawals.)
The Least You Need to Know: Stop making contributions to an HSA as many as six months prior to enrolling in Medicare Part A (but no earlier than the month you turn 65.)
Why?
When someone enrolls in Medicare Part A, they are no longer eligible to make triple-tax advantaged contributions to an HSA. However, when you enroll in Medicare Part A after turning 65, Medicare deems that your Medicare Part A coverage is retroactive up to 6 months or whatever month you turned 65 in. (There’s a long story here I won’t bore you with but it has to do with protecting new Medicare enrollees who are transitioning from employer plans.)
This means you have to plan ahead. Six months ahead.
But what if you are here on our website, and you didn’t plan six months ahead?
- If you have already made the contributions, contact your HSA Administrator and reverse the contributions.
- If you have already had a W2 issued for any part of that contribution, you’ll also need a revised W-2.
- If you have already filed a tax return for the tax year in question, you’ll have to file an amended return.
And as a final note, share this with your HR Administrator. It’s on them to educate employees on HSA plans after turning 65.