HSA Contribution While Retired and Spouse Turning 65

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bhluckyusaguy
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HSA Contribution While Retired and Spouse Turning 65

Post by bhluckyusaguy » Wed Sep 05, 2018 10:50 am

I retired in Dec 2017 at age 61 and DW retired in 2016. I receive a small pension and continue to have the same HDHP family medical plan/coverage until I turn 65. My former employer contributed $1400 to my HSA account in Jan 2018. Looking at other posts, I now realize I can contribute to my HSA account for 2018 (max $7900 for family coverage/over age 55). My concern is DW turns 65 in Oct and how much this impacts the 2018 HSA contributions.

DW does not have a pension or separate HSA account. She recently signed up for Social Security – and Medicare – which started this month (Sep 2018). DW is 64 years & 11 months old. Looking at this July Medicare thread viewtopic.php?t=232149, I believe we don’t fall into the retroactive 6 months Medicare coverage.

I “think” the remaining amount I can contribute for 2018 is $5,183 – this accounts for my former employer’s earlier contribution. I arrived at this figure by dividing $7900 by 2 = $3950 (the full amount that both DW and I can each contribute is $329/month). Obviously I can contribute the full $3950 in 2018 since I am “eligible” for the entire year. However, DW is only “eligible” from Jan thru Aug.

Am I looking at this correctly?

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tfb
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by tfb » Wed Sep 05, 2018 11:56 am

bhluckyusaguy wrote:
Wed Sep 05, 2018 10:50 am
I “think” the remaining amount I can contribute for 2018 is $5,183 – this accounts for my former employer’s earlier contribution. I arrived at this figure by dividing $7900 by 2 = $3950 (the full amount that both DW and I can each contribute is $329/month). Obviously I can contribute the full $3950 in 2018 since I am “eligible” for the entire year. However, DW is only “eligible” from Jan thru Aug.

Am I looking at this correctly?
Not really. DW isn't contributing to your HSA. If you are going to drop her from your former employer's plan after she gets on Medicare, you have 8 months of family coverage and 4 months of single coverage. So $7,900 * 8 / 12 + $4,450 * 4 / 12 - $1,400 (from former employer) = $5,350. If you are keeping her on the plan (and perhaps pay higher premium to cover two people instead of one, depending on what the former employer charges), then you have family coverage for all 12 months.
Harry Sit, taking a break from the forums.

bhluckyusaguy
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by bhluckyusaguy » Wed Sep 05, 2018 12:13 pm

tfb, thanks for your reply. I will keep DW on my former employer's health plan until Dec 31st. We have already met the annual deductible and she wants to get dental and vision things completed.
It looks like we will have full family coverage for 2018 and can deduct the $7900 from our AGI. This will help us continue build the HSA account and minimize taxes. This will help with ROTH conversions (i.e. can convert more since the AGI will be lower and stay in the 12% tax bracket).

Bogleheads are wonderful - financially speaking of course :sharebeer

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FiveK
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by FiveK » Wed Sep 05, 2018 12:47 pm

bhluckyusaguy wrote:
Wed Sep 05, 2018 12:13 pm
It looks like we will have full family coverage for 2018 and can deduct the $7900 from our AGI.
There is still the $1400 from the employer that you cannot deduct, correct?

That limits your combined deduction to $6500 if your spouse does not open an HSA.

See Form 8889 to confirm, but it seems you could deduct $6500 + $667 = $7167 in total if your spouse opens an HSA and uses 8/12 of the age 55 $1000 allowed.

bhluckyusaguy
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by bhluckyusaguy » Wed Sep 05, 2018 3:05 pm

FiveK, I worked thru Form 8889. You are correct - I can only deduct $6500.

Thanks for the correction.

Klmaxx
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by Klmaxx » Wed Sep 05, 2018 7:44 pm

I’m not an expert, but I believe DW cannot be in a HDHP once she is enrolled in Medicare.

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FiveK
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Re: HSA Contribution While Retired and Spouse Turning 65

Post by FiveK » Wed Sep 05, 2018 8:35 pm

Klmaxx wrote:
Wed Sep 05, 2018 7:44 pm
I’m not an expert, but I believe DW cannot be in a HDHP once she is enrolled in Medicare.
It's a bit tricky.

She can be in an HDHP even when enrolled in Medicare, but she is not eligible to contribute to an HSA once Medicare enrollment begins.

DH may contribute the family maximum (minus employer contributions) because
Family HDHP coverage is an HDHP covering an eligible individual and at least one other individual (whether or not that individual is an eligible individual).
Also applicable to DH:
To be an eligible individual and qualify for an HSA, you must meet the following requirements.
  • You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
    You have no other health coverage except what is permitted under Other health coverage, later.
    You aren’t enrolled in Medicare.
    You can’t be claimed as a dependent on someone else's 2017 tax return.
If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage doesn’t cover you.
See Pub. 969 for those quotes and more HSA information.

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