Q. I will be 65 years old in April. I have a job and my working spouse turns 65 in May and is also covered by my company’s health insurance, which also includes prescriptions. I intend to deposit the maximum amount into my HSA, including the additional 50 year olds in 2022. We are in good health and our medical bills so far are for annual checkups and a prescription for glaucoma. We plan to work until at least 67. I understand that I would have to give up my HSA in order to enroll with Medicare and have Medicare as a secondary insurance. What factors should I consider when trying to decide what to do?
– Still working
A. We appreciate your considering health care options.
It is also important to understand the rules before making a decision.
IRS rules say you can no longer contribute Money before taxes to your HSA once you are enrolled with Medicare, said Matthew DeFelice, a certified financial planner with US Financial Services in Fairfield.
However, if you are still employed and are covered by an employer-qualified health insurance and are not yet receiving any social security pension benefits, you can postpone this Medicare registration over 65 years old, said DeFelice. In the absence of current tax deductions, consider deferring Medicare enrollment until you retire, he said.
If so, you can still contribute to your HSA by not signing up Medicare immediately, he said.
“Ultimately, when you retire and no longer have health insurance through your employer, you can enroll in Medicare without the penalty for late enrollment,” he said. “The same rules apply if you are insured through your spouse’s job.”
In your example, a married couple has health insurance through a person’s employer. The employee turns 65 but does not yet plan to retire.
“The couple can both stay on the employer’s health insurance plan. If it’s an HSA-qualified plan, they can keep contributing, ”DeFelice said. “The couple can both enroll in Medicare when the employee retires. They qualify for a special enrollment period, as they lose their previous security after retirement. “
At that point, you will no longer be able to contribute to the HSA, but you can use funds from it towards future healthcare costs, including Medicare premiums, without paying taxes.
“Because of this, the IRS and Medicare recommend not contributing to your HSA for six months prior to enrolling in Medicare in order to avoid these penalties,” he said. “This is especially true if you later enroll with Medicare.”
If you enroll in Medicare after your 65th birthday, the IRS will assume you had access to Medicare six months before your enrollment date, saying “Stop making your HSA contributions at the right time,” DeFelice said.
Send your questions by email to [email protected].
Karin Price Müller writes the Bamboo led Column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘S weekly e-newsletter.