HSA question

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cowlikejaw
Posts: 9
Joined: Mon Nov 19, 2018 10:22 pm

HSA question

Post by cowlikejaw »

Quick question about an HSA.

So I recently switched over from a regular health plan to a family HDHSA plan with my employer, starting in December.
My HR person said that I could self-fund up to the family maximum for the entire year of 2018 in the month of December.
However, on the HSA website calculator, it says that I can only contribute 1/12 of the maximum amount, i.e. only for the time that I've held the HSA.
Anyone have any insight into this? I would love to dump the maximum into the account by the end of the year.
stimulacra
Posts: 868
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: HSA question

Post by stimulacra »

Yes that sounds about right, if you are eligible for coverage in 2018, you can fund up for that entire calendar year on 12/31 if the transaction went through.

I would imagine the IRS would have the most up to date rules and guidelines.

https://www.irs.gov/government-entities ... ements-hra
JediMisty
Posts: 683
Joined: Tue Aug 07, 2018 7:06 am
Location: Central NJ

Re: HSA question

Post by JediMisty »

cowlikejaw wrote: Tue Dec 11, 2018 12:36 pm Quick question about an HSA.

So I recently switched over from a regular health plan to a family HDHSA plan with my employer, starting in December.
My HR person said that I could self-fund up to the family maximum for the entire year of 2018 in the month of December.
However, on the HSA website calculator, it says that I can only contribute 1/12 of the maximum amount, i.e. only for the time that I've held the HSA.
Anyone have any insight into this? I would love to dump the maximum into the account by the end of the year.
The IRS says this:

Last-month rule allows eligible individuals to make a full contribution for the year even if they were not an eligible individual for the entire year. They can make the full contribution for the year if:

They are eligible individuals on the first day of last month of their taxable year. For most people this would be December 1, and
They remain eligible individuals during the testing period. The testing period runs from December 1 of the current year through December 31 of the following year (for calendar taxpayers).
If the taxpayer does not qualify to contribute the full amount for the year, the contribution is determined by using the sum of the monthly contribution limits rule.
OR

Sum of the monthly contribution limits rule (use Limitation Chart and Worksheet in Form 8889 Instructions). This is the amount determined separately for each month based on eligibility and HDHP coverage on the first day of each month plus catch-up contributions. For this purpose, the monthly limit is 1/12 of the annual contribution limit, as calculated on the Limitation Chart and worksheet.
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Edie
Posts: 129
Joined: Fri May 06, 2016 4:03 pm

Re: HSA question

Post by Edie »

A separate consideration.

Did you have an FSA this year with your "regular" health plan? If you did, I believe you are ineligible for an HSA in 2018, unless you changed jobs and the FSA and HSA thus don't overlap.
TropikThunder
Posts: 2670
Joined: Sun Apr 03, 2016 5:41 pm

Re: HSA question

Post by TropikThunder »

cowlikejaw wrote: Tue Dec 11, 2018 12:36 pm Quick question about an HSA.

So I recently switched over from a regular health plan to a family HDHSA plan with my employer, starting in December.
My HR person said that I could self-fund up to the family maximum for the entire year of 2018 in the month of December.
However, on the HSA website calculator, it says that I can only contribute 1/12 of the maximum amount, i.e. only for the time that I've held the HSA.
Anyone have any insight into this? I would love to dump the maximum into the account by the end of the year.
Short answer: yes, you can use the last-month rule to allow a full-year contribution for 2018. However, your HR person left out the significant caveat that you have to stay eligible for all of 2019 (the test period) or your 2018 contribution becomes subject to penalty. There’s a good thread from July on this with excellent info:
viewtopic.php?t=223520

Important point: If you lose HSA eligibility in 2019, your 2018 last-month rule contribution becomes taxable (plus a 10% penalty) but stays in the HSA.
Spirit Rider
Posts: 13908
Joined: Fri Mar 02, 2007 2:39 pm

Re: HSA question

Post by Spirit Rider »

Are you sure that the switch actually happened for December. This is the time of the year for open enrollment for 2019. You enroll Nov/Dec, but the coverage is not really effective until 1/1/19.
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