Claim Social Security After 65 and Medicare Backdates 6 Months. Keep Funding an HSA and the IRS Penalizes Every Dollar.

Applying for Social Security simultaneously enrolls someone in Medicare Part A, retroactively up to six months before their application date. This triggers an automatic six percent excise tax on excess Health Savings Account (HSA) contributions for each year they remain in the account. To avoid this financial trap, individuals must cease HSA contributions at least six months before they file for Social Security or Medicare.

Financial advisors should prioritize their clients' best interests, making the fiduciary model preferable over sales-based advisors. The Social Security Administration mandates automatic enrollment in Part A when an individual turns 65, with no provision to opt-out. Despite many believing their retirement plans are secure, most remain unaware of the potential IRS penalties associated with delayed Social Security and HSA contributions.

Advisors can help clients navigate these complexities and optimize their retirement strategies with a free matching tool that pairs them with qualified fiduciaries.