HSA
My wife just signed up for Medicare and if retiring January 1st, I didn’t realize that part A goes back 6 months and she had HSA taken out this whole time, how will I be able to calculate what I owe in tax and how do I report this? We file joint returns
Terry Says
Whew, this is tricky. And frankly, your question actually taught me something. I had to do a little research! Here’s the rule:
There is a six-month lookback period (but not before the month of reaching age 65) when enrolling in Medicare after age 65, so a best practice is for workers to stop contributing to their HSA six months before the month they apply for Medicare to avoid penalties.
Then read this, specifically:
If you’ve delayed signing up for Medicare, Medicare coverage is retroactive for the six months before you enroll, not including any months before your 65th birthday month. If you’ve made HSA contributions during any of the look-back months, including your birthday month, you’ll owe tax penalties.
Your accountant can calculate how the 6% excise tax penalty applies. BUT, I did find one helpful hint: Contact your plan administrator immediately and see if they can/will reverse the HSA contributions for the past 6 months. That would solve the problem immediately!
