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She is single and would be able to contribute the full amount of $5,150 in 2024. In a 32% tax bracket, does that mean she would be saving $1,648 in taxes?HSA annual contribution limits are (single/family):
2023 $3,850/7,750
2024 $4,150/8,300
There is also additional $1,000 catchup for 55+.
https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits
Average life expectancy for a US female aged 65 is about 20 years (shorter than 2/3 of the other OECD countries). That's two decades of appreciation.
One huge benefit of HSAs is years of buildup of funds ....If she is only going to work 2-3 more years, I wonder if it is worth her while to sign up for the HSA now and deal with unenrolling from Medicare Part A with the Social Security Administration. However, she is in a 32% tax bracket.
You can use an HSA to pay for Medicare PPOs and Medicare PFFS plans as well as Medicare HMO plans. They are all types of Part C (Medicare Advantage) plans.At age 65, you can use your HSA to pay for Medicare parts A, B, D and Medicare HMO premiums tax-free and penalty-free.
If she is only going to work 2-3 more years, I wonder if it is worth her while to sign up for the HSA now and deal with unenrolling from Medicare Part A with the Social Security Administration. However, she is in a 32% tax bracket.@Mona, yes, HSA contributions are not allowed while on Medicare.
Employers may now require Medicare signup for eligible employees. Mine kicked me out of the group plan as soon as I became Medicare eligible (as a retiree).
One huge benefit of HSAs is years of buildup of funds and that won't happen with late signups.
investopedia - transfer-ira-money-to-an-hsaIf money is tight and you’re 59½ or older, you could take a regular withdrawal from your IRA and use it to contribute to your HSA. The tax bite from the traditional IRA withdrawal and the tax deduction from the HSA contribution should nearly cancel each other out. And most importantly, you can do this more than once—in fact, every year if you want.
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