Important Nuance to Last Email
Last time, in the post titled “Working Beyond 65,” I wrote this about Medicare Part A:
Part A is a good idea when you turn 65. The main exception is that if a person has an HSA account and is contributing to it (you or anyone else).
There is another subtlety here. That is, if you delay enrolling in Part A due to the fact that you have an HSA account and want to contribute, you need to remember that at the time that you do apply for Part A, the actual Part A coverage date will be set backwards in time, and therefore, can affect your HSA contribution limit, which is pro-rata shared.
Example: Let’s say you are now 66, and apply for Part A now (on Valentine’s Day). The Part A coverage date will be September 1, 2021. That creates a problem because if you have contributed to your HSA account in 2021, your contribution limit is 9/12 x last year’s limit ($3600) = 9/12 * 3600 = $2700, NOT $3600. If you have contributed $3600, then you have over-contributed by $900, and is subject to possible tax penalty (we are not CPAs over here).