Question

Medicare due to kidney transplant and HSA contributions

Forum|Forum|7 years ago
June 1, 2019
1 reply
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I had a kidney transplant on 4/12/16 at the age of 42. I was covered by a HDHP insurance policy through my employer for all of 2016. I made contributions to my HSA for all of 2016 totaling $6,699, of which $1,800 was contributed after 4/12/16. I subsequently found out that I was eligible for Medicare due to kidney transplant. I applied for Medicare in December 2016 and received notice in January 2017 that Medicare Part A started Jan 2016 and Medicare Part B starts Jan 2017. Are any of my HSA contributions taxable or subject to penalty? If so, how do I handle the situation on my tax return?

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ghost

Employee

Medicare enrollment starting January 1, 2016 makes you ineligible for all 2016 HSA contributions.
If any of those contributions were made pretax (through employer), they will become taxable as ordinary income. Any contributions that were made after tax will not be deductible on your tax return. To avoid a 6% penalty on the $6,699, you must request, from your HSA bank, an excess contribution withdrawal of the $6,699. If there is less than that amount available in your account, you should withdraw the complete balance.