A Case Study<\/strong><\/h3>\n\n\n\nTake Maria, for instance. At 67, Maria chooses to delay her enrollment in Medicare because she\u2019s still working and is covered by her employer\u2019s group plan. She enhances her employer coverage by opening and making maximum annual contributions to an HSA. At age 67, Maria retires and chooses to enroll in Medicare. She actively enrolls in July, which means that she\u2019ll be retroactively enrolled in Part A by January. In November and December of her retirement year, Maria is eligible to contribute to her HSA ([the maximum HSA contribution allowed for the year \u00f7 12] \u00d7 2 months of eligibility). Maria would have until February 15 of next year to make her allowable two-month HSA contribution for this year.<\/p>\n\n\n\n
Retroactive coverage in Medicare Part A could also affect those whose HSA contributions are subject to any testing period. Suppose an individual ceases to be HSA eligible during a testing period. In that case, a portion of the HSA contributions made will be \u201crecaptured,\u201d included in your total yearly income, and subject to an additional 10 percent tax penalty.<\/p>\n\n\n\n
Once enrolled in Medicare, you can no longer make contributions to your HSAs. Any residual funds in the account can be taken as tax-free distributions to pay for qualified medical expenses. Such costs include Medicare Part B and Part D premiums, out-of-pocket medical costs, dental and vision costs, and an employee\u2019s share of retiree medical insurance premiums, to name a few. However, the money cannot be used to purchase a Medigap policy. If you use the money for anything non-medical-related, ordinary income tax will be due on the amount withdrawn, but no penalty applies since the HSA holder is 65 or older.<\/p>\n\n\n\n
Planning for the Transition<\/strong><\/p>\n\n\n\nIf you\u2019re still concerned about transitioning from HSA to Medicare coverage, speak with your advisor today to discuss your options. At URS Advisory, we help individuals and families on the Treasure Coast and throughout the Palm Beaches to effectively work Medicare coverage into their comprehensive retirement plan. If you or a loved one are in need of guidance, we encourage you to reach out to us. Schedule a call<\/a> directly through our site or call our office at (561) 594-0100.<\/p>\n","protected":false},"excerpt":{"rendered":"When will you become enrolled in Medicare? And how should that influence your use of a Health Savings Account (HSA)? Even though both HSAs and Medicare govern your medical-related finances, these two programs are overseen by two different federal agencies. HSAs are managed by the Department of the Treasury, while Medicare is run by the […]<\/p>\n","protected":false},"author":1,"featured_media":722,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"acf":[],"yoast_head":"\n
What To Do with Your HSA Once You Become Eligible for Medicare - URS Advisory<\/title>\n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n