Can I restart HSA contributions if I terminate Medicare?

It appears that I have an unusual situation.  I was employed with a HDHP and had been making contributions to an HSA.  My employer had financial problems and it seemed I would lose healthcare.  I was 65 at the time, so I enrolled in Medicare part A & B effective June 1, 2024.  The company is now back on a solid financial footing and I would like to cancel Medicare and start contributing to to my HSA again.  My HDHP coverage is still in effect, in addition to the Medicare A & B.  I would like to terminate now, then re-enroll in Medicare in 2-3 years when I retire.

I understand it is possible to terminate Medicare A & B using Form CMS-1763.  What is unclear is whether I can restart HSA contributions.  I would appreciate any advice. Thanks.

HSA eligibility is determined as of the first day of each calendar month.  You can therefore become HSA-eligible again once you satisfy all of the requirements on the first day of a month by a) no longer being enrolled in any part of Medicare, b) having no other disqualifying coverage, and c) enrollment in an HDHP.  

If this occurs mid-year, you will have a prorated contribution limit (including prorated catch-up amount) based on the number of months of HSA-eligibility.  You can avoid that prorated limit if you take advantage of the last-month rule by maintaining HSA eligibility from December of the year at issue through the entire following year.

Here's an IRS Information Letter addressing the issue and referring to the same form you mentioned:

https://www.irs.gov/pub/irs-wd/17-0003.pdf

The question of whether an employee enrolled in Medicare can withdraw from the program and thereby participate in an employer’s HSA program is not within the jurisdiction of the IRS. This question should be directed to the Social Security Administration at 1-800-772-1213; ask for Form CMS-1763, Request for Termination of Premium Hospital and/or Supplemental Medical Insurance.

More details:

• https://www.newfront.com/blog/how-medicare-affects-hsa-eligibility
• https://www.newfront.com/blog/the-hsa-proportional-contribution-limit

Slide summary:

2024 Newfront Go All the Way with HSA Guide