HSA Question

[cmlynch100]

Ok, the discussion got continued. You have confirmation for your position from another quite experienced agent.

Looks like I was wrong on this issue.

The fact that the "family" contribution equals two "individual" contributions was confusing to me.

The example cited from the IRS pub went to a dependent child, not to a spouse as a specific example.

And I think I was getting mixed up with rules on page 4 and rules on page 7 for married couples.

Anyway, it seems your position is the correct one.

Just for some clarity, I am a new poster here but I have been assisting clients transition to Medicare since 2015 and have assisted north of 2,000 individuals thus far.

 

[LostDollar]

Just for some clarity, I am a new poster here but I have been assisting clients transition to Medicare since 2015 and have assisted north of 2,000 individuals thus far.

Thanks. There are a lot of posters here, some I can remember and some I can't. Thanks for taking the time to tell me of your experience.

I hope you will find the interactions with other agents here to be of benefit.

 

[Dave G]

Coming in late on this topic and find the "lawyerly" replies interesting. I must side with those saying once enrolled in any Part of Medicare, you are no longer eligible to make or receive tax-favored HSA contributions. Two reasons as follows....from irs.gov instructions for Form 8889 which must be filed with your tax return if you have an HSA:

Eligible Individual
To be eligible to have contributions made to your HSA, you must be covered under a high deductible health plan (HDHP) and have no other health coverage except certain disregarded coverage. If you are an eligible individual, anyone can contribute to your HSA. However, you cannot be enrolled in Medicare or be another person's dependent.
Can't be any clearer: 1) You are not eligible if enrolled in Medicare; 2) you must have no other health coverage except disregarded coverage.

Having just Medicare Part A disqualifies you since the deductibles and co-pays do not meet requirements of an HDHP. It is also considered "other health coverage" per the above. Disregarded insurance would be things like dental or vision, etc.

Source: [EXTERNAL LINK] - Instructions for Form 8889 (2024) | Internal Revenue Service

 

[cmlynch100]

Hi Dave, it's true that the person enrolled in Medicare A can't contribute to an HSA that they own. That however was never the question.

The question is if an employee under 65 who is enrolled in an HSA with a spouse 65+ (with that spouse being enrolled in Part A) can contribute the family maximum to their HSA. The answer to that is unequivocally yes. This exact question was framed to Turbo Tax and I included their response. The employee owns the HSA, they have family coverage with the spouse who is on the coverage and Part A - the employee can max out the family contribution.

The above situation is clearly acceptable.

 

[somarco]

I have found HSA Bank to be a reliable source for HSA information . . .

Frequently Asked Questions

www.hsabank.com

 

[bwinters]

Once enrolled in Medicare you are no longer eligible to contribute to an HSA.

The Medicare enrolled member cannot contribute, but the spouse still can. However, the amount allowed will be for one person (I believe $4,300 for 2025) not the family amount.

Now, the question I am not sure of is, can the Medicare enrolled member max out the HSA before enrolling in Medicare for the year, or is the allowed amount pro-rated for the year? Might be a good question for a CPA

There is a lot of confusion about this issue. I hear it from HR reps, agents and employees/beneficiaries.

The person who is the "owner" of the HSA account is the only one that the "Other coverage" rule affects for HSA contributions. If I am the person who owns and contributes to the HSA whether the individual max or family max, it doesn't matter if my spouse is Medicare eligible and enrolled in Part A, I can still contribute the max family amount to the HSA. If I am the account-owner and contributor and I enroll in Medicare Part A, I can no longer contribute any amount to the HSA. And remember that Part A can be backdated either 6 months or to the 65th birthday month, whichever is closer to the application time, and you can't frontload HSA contributions, so the proration calculations are very important in this situation. Please don't tell someone that when their spouse goes onto Medicare part A, that they can no longer contribute to HSA for that spouse, as that is not fact. Health Equity is local to me and we have had conversations with their executive team about this issue. Here's a publication from them: www.healthequity.com/doclib/hsa/medicare.pdf

 

[bwinters]

I had lunch with a broker friend and HSA's came up. Specific situation was an under 65 employee providing employer based coverage for themselves and their 65+ spouse. Broker friend stated that the 65+ covered dependent could not enroll in Part A if the employee wanted to continue to contribute the max family amount to the HSA. This is not how I've always understood and doesn't match what the documentation states either. What is your understanding of this? I've always thought as long as the HSA was in the name of the under 65 employee, they could contribute the max family amount if the covered dependent was 65+ and enrolled in A.

Hi cmlynch! Want to be sure you got a clear answer. Please understand that the only person that being on Medicare affects the contributions is the accountholder. If they have a Medicare-eligible spouse on Part A (or Part B) and on the QHDHP, the accountholder CAN still contribute the full family amount even if it's just them and spouse on the plan. The spouse being on Medicare does not impact whether or not full family HSA contributions can be made tax-free. I posted a link to a document from Health Equity to answer that question, but here is it again www.healthequity.com/doclib/hsa/medicare.pdf

 

[LostDollar]

There is a lot of confusion about this issue. I hear it from HR reps, agents and employees/beneficiaries.

The person who is the "owner" of the HSA account is the only one that the "Other coverage" rule affects for HSA contributions. If I am the person who owns and contributes to the HSA whether the individual max or family max, it doesn't matter if my spouse is Medicare eligible and enrolled in Part A, I can still contribute the max family amount to the HSA.

Per other comments in the thread, Only if the spouse or another dependent of the HDHP holder is also included in the HDHP coverage.

 

[bwinters]

Per other comments in the thread, Only if the spouse or another dependent of the HDHP holder is also included in the HDHP coverage.

Right. Must be covered on the HDHP insurance plan