HSA – Employer contributions after going on Medicare
I retired a few years ago with the HSA required high deductible health insurance. The employer will also continue a small contribution to my HSA until both the spouse and I are on Medicare.
I went on medicare in Oct 2013. In January 2014 my spouse is enrolled in my employer’s high deductible individual insurance plan rather than the family plan. The employer also recently made a $500 contribution to my HSA for 2014.
Reading the instructions for form 8889 it doesn’t look like contributions to HSA’s can be split between spouses if not on the family plan. Therefore I was expecting that they would make that contribution to the spouse’s HSA. Is my interpretation correct?
Thanks for any help.
Permalink Submitted by Alan - IRA critic on Sun, 2014-02-09 00:02
Yes, you cannot have any contributions going to your HSA after you are entitled to any part of Medicare. You will need to have it removed as an excess contribution, or perhaps the employer can simply transfer the contribution to her HSA.
Permalink Submitted by Dave Haynie on Sun, 2014-02-09 16:24
Thanks Alan.The employer is not easy to work with so if they are unwilling to transfer the contribution to the spouse seems like I could simply withdraw the excess contribution and pay the tax. I think there is no penalty if I withdraw this year along with the accrued interest. If this is so how would the contribution be reported on the 1040?
Permalink Submitted by Alan - IRA critic on Sun, 2014-02-09 17:49
You must include the excess contribution on line 2 of Form 8889, but further down the form will not allow you to deduct it because it will be identified as an excess contribution. The only additional tax would be on the earnings showing in Box 2 of the 1099SA if any. The earnings will be taxable and you would list them on line 21 of Form 1040, but since the excess contribution was made in 2014, any earnings will be taxable for 2014. You may also have an excess contribution for 2013, but if you both are covered by a family plan in 2013, you can split the deduction between you and your spouse.