How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Anne Your Own Question
Anne
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2355
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
5242771
Type Your Tax Question Here...
Anne is online now
A new question is answered every 9 seconds

I am 64. My husband is 68 and retired August 1, 2015, at

Customer Question

I am 64. My husband is 68 and retired August 1, 2015, at which time I had to get individual health insurance because he is on Medicare now. Effective August 1, 2015, I enrolled in a qualified High-deductible health plan with HSA. Here's my problem: In August, 2016, I will be 65 and will be enrolled in Medicare, therefore losing eligibility with my HSA. I understand that I am also not able to meet the "test period" for HSA either since it began for me Dec. 1, 2015 and I won't be able to continue it past August 1, 2016, thus I can't meet the 12-month test date of December, 2016. If I understand this idiotic catch-22 rule, this means that I can only contribute a pro-rata portion of the maximum to my HSA. So here is my question: How much can I contribute from 2015 and how much from 2016 without incurring taxation or penalty and how long do I have to contribute these $$$ within each year applicable (2015 and 2016).
Here is my question: I don't meet the "test" of HSA enrollment from Dec. 1, 2015 thru Dec. 2016 since I can't continue it when Medicare begins in August 1, 2016. So, what can I contribute in 2015 and how long do I have to make this contribution, as well as what can I contribute in 2016 into my HSA and how long do I have to make this contribution both without incurring taxation or penalties.
Submitted: 6 months ago.
Category: Tax
Customer: replied 6 months ago.
Sorry, last paragraph redundant
Expert:  Anne replied 6 months ago.

Hi Marcia

I'm Anne. I've been preparing taxes for 28 years and I'll be happy to help you.

You actually have a couple of options here.

1-you can contribute a reduced $ amount to your HSA using the "Sum Of The Months" as found on page 2 of below:

https://www.hsaresources.com/pdf/Testing_Period_Worksheet.pdf

Sum of the Months merely means that you pro rate the contribution limit by the # ***** months you're eligible to give before you turn age 65 '

The contribution limit for BOTH 2015 & 2016 is $3350

You will also want to look at example 4 entitled "Not Eligible on December 1"

However, you also have the option of keeping you HSA by electing NOT to sign up for Medicare. Please see page 3 from below:

http://www.ifebp.org/inforequest/ifebp/0166103.pdf

If my answer has helped you, please take the moment to rate positive by clicking on the stars.

It is ONLY though positive ratings that we are compensated for our time and knowledge.

Thank you for choosing justanswer

Customer: replied 6 months ago.
I already knew that as noted in my Q. and had already seen the same article that you included, thus why I asked. Plus the $3350 limit annually, actually also includes an additional $1000 due to being between 55-65, right? But here is what I was actually asking. Because I can't meet the "test period" December 1 2015 thru Dec. 31 of 2016 and must pro-rate since I AM taking Medicare for 2016 when I turn 65 in August, how long do I have to make this contribution for 2015 and how long for 2016? I have 5/12 in 2015 (August thru December. So is that amount then $3350 plus 1000 = $362.50 per month x 5 = $1,812.50? If yes, what is the cut-off for contributing this amount for 2015. AND, for 2016, I will have had the HSA from January thru July = 7 months. $3350 annual = $279.16 per month x 7 = $1954.12. Is this correct? If so, what is the cut-off for contributing this amount for 2016? Thanks
Expert:  Anne replied 6 months ago.

Hi again Marcia

You have until April 15th of the following year to fund your HSA (the date your tax return is due) Please see below:

https://newdirectionira.com/ira-info/contributions/hsa

So if you wanted to put $ into your HSA for tax year 2016, you have until April 15,2017. Unfortunately, that means that you can no longer put money in your HSA and have it count for tax yer 2015.

The additional $1000 catch up contribution is IN ADDITION to the $3350 limit. Please see page 4 of the following:

https://www.irs.gov/pub/irs-pdf/i8889.pdf

As for the pro rated contributions for 2016 (2015 date is passed) your theory is correct, but you will want to include the $1000 catch up contribution . $4350 /12 = $362.50 per month.

I hope this helps

Expert:  Anne replied 6 months ago.

I see you have read my response. Do you have additional questions I can help you with? Do you need additional information before you rate the answer? If so, please post your questions here so that I may continue to help you.

If my answer has helped you, please rate positive by clicking on the stars. It only takes a few moments, and it is ONLY through positive ratings that we are compensated for our time and knowledge.

Thank you for choosing justanswer.

t