Question:

If an individual with an HSA-compatible health plan enrolls in Medicare in July, how much are they allowed to contribute to their HSA?

Answer:

Once an individual enrolls in Medicare, they are no longer eligible to contribute to an HSA and they must prorate the annual contribution limit (including the catch-up amount) based on the number of months that they were eligible during that year. In this example, if an individual turns 65 and enrolls in Medicare as of July 1st, they would need to prorate the annual contribution limit (including the catch-up amount) by 6/12 since they were only eligible for 6 out of the 12 months during that calendar year. (Based on IRS Notice 2004-67)