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MEDICARE AND HEALTH SAVINGS ACCOUNTS

Posted by Admin Posted on Jan 23 2017

The collision of Medicare and Health Savings Accounts (HSAs). In an Information Letter (IL), the IRS outlined how retroactive Medicare coverage may affect a taxpayer’s eligibility to add to an HSA, which is subject to contribution limits. Eligibility for Medicare makes an individual ineligible to have an HSA. If Medicare coverage is retroactive, it may trigger a 6% excise tax on the excess contributions. The IL advised taxpayers how to avoid the excise tax on contributions that are deemed excessive by virtue of retroactive Medicare coverage. (IL 2016-0082)

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