Medicare can be a confusing process for employers and employees. One question that we get asked a most often is if an employee turns 65 this month and enrolls in Medicare Part A, can he or she still receive/contribute funds into an HSA until the end of the year or must he enroll in a different plan now?
Beginning with the first month the employee is enrolled in Medicare, he or she can no longer contribute to the health savings account (HSA). However, the money that is already there is still his or hers.
Whether or not the employee is eligible to make new HSA contributions, existing HSA account funds are not affected. Even if the employee is no longer HSA-eligible, he or she can still take tax-free HSA distributions to pay or reimburse qualified medical expenses. The trustee will report any distribution to the employee and the IRS on Form 1099-SA, Distributions from an HSA, Archer MSA, or Medicare Advantage MSA.
Qualified medical expenses are those expenses that would generally qualify for the medical and dental expenses deduction. These are explained in Publication 502, Medical and Dental Expenses. For more information about HSAs click here.
If you have any questions regarding Medicare or you’d like a review of your employee benefits, the Exton Region Chamber of Commerce offers our members access to the My Benefit Advisor (MBA) program. More information is available at: ercc.mybenefitadvisor.com or by contacting Peg Sciortino at 484.351.7494 or firstname.lastname@example.org.