HSA's

[schirallicpa]

Client is 61. I know she'll be eligible for medicare at 65. Then the HSA will be a mute point.

In the past, the former employer has kept her on the health insurance policy as an eligible retiree. The former employer is considering an HSA plan to cut costs. Can my client as a retiree still qualify to receive this benefit - the employer will fund the HSA $1500 annually. Will this be a taxable benefit to her? Can she even participate? Or is she out on her own?

Not finding much helpful info on internet on this specific topic.

Any thoughts w/b appreciated.

thanks.

[LindaB]

I don't see why she couldn't participate in this. Normally employer contributions are not taxable, but I don't know if this would be true for a retired employee. It seems that if the employer had to give her the money as taxable, then she could deduct the contributions on her tax return so it would be a wash.

Have you looked at pub. 969? I don't know for sure the answers to your questions, but at least this will move your question up and maybe others will answer.

[schirallicpa]

hey - thanks for giving me a bump up. I appreciate it.

I had looked at that Pub and hadn't really found what I was looking for. I think the client's concern is whether or not it's taxable income to her. I'm thinking the tax amount would be pretty small anyway.

I think that the former employer will pay for the high deductible plan as per usual and that will continue to be a tax free benefit. And what ever that they decide to contribute to the HSA will be of neglible tax effect. And, as you said, would be a wash.

I just hadn't seen anything like that before, and really can't find anything black and white.

We don't see too many of these in our area yet. One of the bigger employers in the area have them.