HSA Guidance
IRS has clarified that eligibility for Medicare will not prevent an individual
from being eligible for an HSA. It is only when the individual becomes
enrolled in Medicare that the individual becomes ineligible.
This Announcement consists of two corrections in Notice 2004-2:
- The announcement corrects the following sentence in Q/A-14 that previously
read, “After an individual has attained age 65 (the Medicare eligibility
age), contributions, including catch-up contributions, cannot be made
to an individual's HSA.” The corrected sentence reads, “After
an individual has attained age 65 and becomes enrolled in Medicare benefits,
contributions, including catch-up contributions, cannot be made to an
individual's
HSA."
- The second correction changes the phrase “becomes eligible for” in the first sentence of the Example in A-14 to “becomes enrolled in”.
You might also see the term “Medicare Entitlement” used when discussing this topic. This term describes the situation when an individual is both eligible for Medicare and enrolled for Medicare coverage. For instance, contributions cannot be made to an individual’s HSA if the individual is entitled (eligible and enrolled) to Medicare.
Click here to view IRS Announcement 2004-67 (Sept 7, 2004) (page 459 of Bulletin No. 2004-36).