Discussion Archives:HSA - Employer mistakenly enrolled employee on Medicare

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Discussion Forum Index --> Advanced Tax Questions --> HSA - Employer mistakenly enrolled employee on Medicare


Discussion Forum Index --> Tax Questions --> HSA - Employer mistakenly enrolled employee on Medicare

Jake (talk|edits) said:

2 March 2008
Taxpayer enrolled in Medicare Part A - IRS intructions say therefore no eligible for HSA.

Employer contributed $700 to HSA for this employee. $189 paid out of HSA in 2007 for med expenses. Is the 6% penalty just once - for 2007? Or do ypu ahveto pay 6% a year until you take that $700 out?

Kevinh5 (talk|edits) said:

2 March 2008
employer doesn't enroll people in Medicare - they have to do it themselves

Jake (talk|edits) said:

2 March 2008
I can see how my title could ve misinterpreted.

The employee obviously enrolled himself in Medicare Part A.

The employer mistakenly allowed this employee to be enrolled in this employer's HSA plan.

Employer contributed $700. Paid out $189 in HSA eligible claims.

Blrgcpa (talk|edits) said:

2 March 2008
An employee that is 65 can and should enroll in medicare part a. There is no cost to him.

However if he's still working, he can be covered by the emplyer provided health ins until he stops working. At that time the emplyee will have to sign up for medicare part b and d.

Jake (talk|edits) said:

3 March 2008
All true - but if you are on Medicare you cannot participate in a HSA as that is for people with high deductible med ins plans. WQuestion is, once you've mae that mistake - money goes into ypur HSA account, what do you do?

Trillium (talk|edits) said:

3 March 2008
You've got to get it, and any earnings, out of the account before the due date (including extensions) of the 2007 return. The 6% excise tax applies every year it stays in there. But see pub 969, as there is one possibility for good news: if the taxpayer just enrolled in Medicare sometime during 2007, and the employer contributions were all prior to the enrollment month, that's an allowable contribution.

Jake (talk|edits) said:

3 March 2008
In 2006 I had a client that paid in too much - we just paid the 6% penalty and some income tax I think. In 2007 she paid in significantly less than allowed and the ProSeries program seemed to eliminate that prior year overpayment - apparently treating it sort of like she took it out and then reapplied it to 2007.

IMO HSA's were the result of a lame brained President along with an even more lame brained Congress.

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