Health Savings Accounts
Dear Sir/Madam,
I have a client who has a Health Savings Account. He plans to work 1/2 year and retire in July 2014.
Is he eligible to make the full contribution to a HSA even if he doesn’t work a full year?
Thanks in advance,
Chris
Permalink Submitted by Alan - IRA critic on Mon, 2013-11-25 21:43
Assuming he is single and he will not have coverage under a HDHP after July, but is employed on 7/1, his contribution is limited to 7/12 of the annual contribution. There is a last month rule such that if he was covered on 12/1, he could contribute for the entire year, but that would not happen unless he returned to work. If married, please advise.
Permalink Submitted by Christopher Combs on Tue, 2013-11-26 03:06
Alan,Thank you for your response. He is married to a homemaker- she has no earned income.Best,Chris
Permalink Submitted by Christopher Combs on Mon, 2014-03-03 22:47
Dear Sir/Madam, I’m just circling back around on this question above. My client is married to a homemaker and she has no earned income. Would he be eligible to make a full contribution to his HSA even if he only works until July this year?Thank you,Chris
Permalink Submitted by Alan - IRA critic on Mon, 2014-03-03 23:29
Chris, sorry I missed this before. For 2014, if he is covered by a family HDHP for which coverage ceases sometime in July and only HE has an HSA account, he can make 7/12 of his family contribution limit of 6,550 plus 7/12 of 1,000 catchup contribution if he is 55. I get 4,404 for the total if he is 55. This also assumes he is not Medicare eligible before August. No catchup contribution for spouse unless she has her own HSA.
Permalink Submitted by Christopher Combs on Tue, 2014-03-04 18:26
Alan,Thank you for your response and the detail. I have a question about “Medicare eligibility.’ My client is eligible for Medicare because he is 65 years old; however, he has not filed for Medicare Part A or Medicare Part B. Would this still allow him to make the contribution you reference above?Thank you,Chris
Permalink Submitted by Alan - IRA critic on Tue, 2014-03-04 19:43
He could if he has also NOT filed an application for SS benefits. If he is collecting SS benefits, then he has been automatically enrolled in Medicare. This may help: http://www.aarp.org/health/medicare-insurance/info-04-2009/ask_ms_medicare_question_53.html