Medicare Part A forced enrollment with Social Security benefits ruined our HSA - any way out?

Unfortunately, the SSA representative is correct. Once you claim Social Security benefits after age 65, Medicare Part A enrollment is mandatory and automatic - there's no way to decline it while keeping your SS benefits. This has been a major issue for people with HSAs for years. The good news is you have options for handling the HSA contributions already made. You'll need to contact your HSA administrator and request an "excess contribution withdrawal" for any contributions made after your Medicare Part A effective date. This needs to be done before tax filing deadline (with extensions) to avoid the 6% penalty. Make sure they also calculate and include any earnings on those excess contributions.

Yes, this is absolutely correct. It's one of the most frustrating connections in the Social Security/Medicare system that catches many people by surprise. When you apply for Social Security benefits at or after Full Retirement Age (FRA), you are automatically enrolled in Medicare Part A - even if you explicitly decline it. This is mandated by law. The Part A enrollment makes you HSA-ineligible as of the effective date. For the excess contributions: 1. Contact your HSA administrator immediately 2. Request a corrective distribution of excess contributions (both your 2024 and 2025 amounts) 3. You'll need to pay income tax on any earnings those contributions generated If you wanted to maintain HSA eligibility, your only option would have been to delay collecting Social Security retirement benefits until you were ready to stop HSA contributions. This is a common planning oversight that financial advisors should warn clients about.

To answer your follow-up question - yes, you could potentially withdraw your application for retirement benefits if it's been less than 12 months since you began receiving payments. This is called a "withdrawal of application" (not a suspension). You would need to repay all benefits received so far. This would effectively cancel your Medicare Part A as well, restoring your HSA eligibility. You could then reapply for Social Security later when you're ready to give up the HSA (such as when your wife retires). It's a difficult financial decision - you're weighing the value of your Social Security benefits against the tax advantages of HSA contributions. For most people, the Social Security benefits are worth considerably more.

We ran into the EXACT same problem last year!! My husband got his SS at 68 even tho he was still on my work insurance & they automatically signed him up for medicare A. We had to take out like $6000 from our HSA and it was a HUGE headache. Our HR dept didnt even know about this rule!!! Nobody tells you this stuff until its too late

Are u absolutely sure about this??? I'm still working at 66 with company insurance & HSA and was planning to get my Social Security next year but keep working for 3-4 more years. I didn't know my HSA would be affected!!! This is crazy!!! The government is making it IMPOSSIBLE to plan for retirement properly!!!!!

I tried calling Medicare AND Social Security about something similar last month. Spent 4 hours on hold over 2 days and never got anyone. Finally found a service called Claimyr (claimyr.com) that got me connected to a real SSA agent in 15 minutes after weeks of trying. They have a video demo at https://youtu.be/Z-BRbJw3puU showing how it works. Saved me from having to take a day off work to go to the SSA office. Might be worth trying if you need to talk to someone about the specifics of your HSA situation.

this happened to my parents to!!! its the dumbest rule ever and nobody tells u about it. mom had to take all there HSA $ out and pay taxes on it ugh

To answer your specific question about the 6% penalty - if you correct the excess contributions before your tax filing deadline (including extensions), you can avoid the penalty entirely. But you need to act quickly. Contact your HSA administrator and specifically request an "excess contribution correction" for both the 2024 and 2025 amounts. They'll calculate the attributable earnings that also need to be distributed. You'll pay ordinary income tax on those earnings, but no penalty if corrected timely.

I thought maybe you could opt out of Medicare A, but I just double-checked and its true - you CANT decline Part A if your getting SS benefits. Its right on Medicare.gov: "If you're eligible for premium-free Part A, you can't reject Part A without also rejecting all Social Security benefits." This rule is so stupid!!!!!

This Medicare Part A/HSA conflict is actually becoming a significant financial planning issue for many older workers. I specialize in retirement planning, and here's what you should know: 1. The Medicare Part A enrollment is indeed automatic and unavoidable when you claim Social Security after 65 2. For the excess contribution correction: - Contact your HSA administrator immediately - Request the correction for both tax years affected - This must be processed before your tax filing deadline (including extensions) - You'll receive a 1099-SA for the distribution 3. For the future, you still have some HSA-related options: - Your wife could switch to a self-only HSA contribution ($4,150 for 2025) since she remains eligible - You can still use existing HSA funds for qualified medical expenses - You can no longer contribute to the HSA, but can still benefit from tax-free withdrawals Make sure to keep documentation of your Medicare enrollment date in case of future IRS questions about the timing of your HSA contributions.

The whole system is designed to PUNISH people who work past 65!!!! I'm so angry about this. Why should we be FORCED to take Medicare A when we have good insurance??!! This country makes no sense sometimes. Sorry this happened to you but THANK YOU for posting because now I know to delay my SS benefits!!!!

Yes, that's correct. Your wife can continue making individual HSA contributions at the self-only rate ($4,150 for 2025 plus $1,000 catch-up if she's over 55), and you can both continue using all accumulated HSA funds for qualified medical expenses tax-free throughout retirement. One planning note: Once your wife enrolls in Medicare (when she retires or turns 65), she'll need to pro-rate her HSA contribution for that year based on the number of months she was eligible before Medicare enrollment. The HSA remains a powerful retirement planning tool even after one spouse has Medicare, just with reduced contribution limits. The tax-free growth and withdrawals for medical expenses continue to be valuable benefits.