Thread regarding Honeywell International Inc. layoffs

@4qjx This seems to be for people 65 or older. A quick search found:

https://www.ncoa.org/wp-content/uploads/Part-A-HSA-Penalty.pdf

Claiming SS benefits beyond age 65 years triggers automatic Part A enrollment and a retroactive
Part A coverage period that cannot be declined. The retroactive Part A period is limited to 6 months
and cannot go back further than the entitlement date. An IRS penalty applies to HSA contributions
made, even if unknowingly, during the Part A retroactive period. To avoid an IRS penalty, stop
contributions to the HSA between 1-7 months prior to enrolling in Medicare Part A or
claiming Social Security (SS) benefits after age 65 years.

Watch out making HSA contributions if you are close to taking Medicare. Get some advise about that.

@1ppj: Your comment "Financial advisors are not Tax pros..." is not necessarily true. The company I use handles both my investments and taxes with their CFP (certified financial planner) and CPA (certified public accountant) qualifications. My financial planner has both certifications, is a tax pro, and gave me the correct advice about the tax consequences of using COBRA insurance which was HSA eligible. It cost more but had better tax consequences instead of Obama care.

One thing I didn't make clear: it depends on when your Honeywell insurance runs out, AND if the replacement plan for the rest of the year is HSA compliant. I didn't think that second part mattered. It does.

Actually, there are caveates to fully funding your HSA...it depends on when your insurance runs out. I found this out the hard way, as I was laid off Jan 1 and had company HSA compliant healthcare insurance through June. During severance period I loaded up my HSA with annual max allowed contribution.

Fast forward to tax season: as it turns out, my remaining 6 months of that year were covered on O'bama Care, with a plan that was not HSA compliant. I knew that, but didn't think it mattered. Uh-oh. I paid a tax penalty that year which would have recurred annually, had I not pulled out the "excess" contribution and paid tax on it the following year.

Financial advisors are not Tax pros and should not be delving into things they know nothing about. Myself, I thought it was a no brainer, but when I saw the tax forms showing where/how I'd run afoul of the law, it was abundantly clear that I had erred in my "smart" assumption the prior year. I connived my way into having to pay tax on money that I thought was tax-free, paid a penalty for that fuzzy thinking, and faced a never-ending annual penalty for having that money sit in the account until it was all disbursed. Oh, and there's a form for that, too. So much for my being clever.

I left on a VRIF two years ago with a six month severance and yes your 401k contributions stop. Your health insurance continues through your severance period. You have a choice to continue or stop your HSA contribution.

I discussed the HSA payment option with my financial advisor and was told the following. At the end of your severance you have to choose whether to stay with the Honeywell health insurance with COBRA coverage for up to 18 months which I did or buy it on the open market. At 60 years old and a single man insurance on the open market was over $1200 year and COBRA was about $520 year.

My financial advisor told me to max out my HSA payments to pay the full year allowance in those six months. (which for 2020 is $3550 +$1000 if you're over 55) The HSA deduction is made with pre-tax dollars for future use for health care.

The benefit to this is you are allowed to pay COBRA insurance premiums with those pre-tax dollars.

Thanks or the info. Glad to know the HSA can continue. Would not want to stop building the amount in my HSA.

You can ask them to stop the HSA if you want to.

HSA yes, HW Savings no.