The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: FIPharm on January 03, 2019, 10:00:26 AM
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Hey MMMs,
Quick question. . I'm currently enrolled for a HDHP for 2019 and will be maxing my HSA (2019) this week but I was not enrolled in a HDHP for 2018 (previous year) . . would I be able to max out my contributions for both 2018 ($3450) and 2019 ($3500)?
Thanks for your help!
E
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Unfortunately not.
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Ah I see . . Thank you for the quick reply! :)
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To be more specific, the contribution limit is actually divided in 12 for each month you're an eligible individual (i.e. covered only by HDHP insurance and no other).
If you're covered by an HDHP for all of 2019, you get to make the full $3,500 contribution. If you switch to some other coverage at the end of April, you only get to contribute $1,166.66 ($3,500 / 12 * 4).
Furthermore there's a "last-month rule" that allows you to make a full-year contribution if you have HDHP coverage for December and maintain that coverage for the entire following year. So if you had switched to HDHP coverage starting on or before December 1 of last year, you would be able to make a full $3,450 contribution for 2018 provided you intend to continue with an HDHP for all of 2019. However if your coverage switched on January 1 instead, the 2018 contributions are not available to you.
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To be more specific, the contribution limit is actually divided in 12 for each month you're an eligible individual (i.e. covered only by HDHP insurance and no other).
If you're covered by an HDHP for all of 2019, you get to make the full $3,500 contribution. If you switch to some other coverage at the end of April, you only get to contribute $1,166.66 ($3,500 / 12 * 4).
Furthermore there's a "last-month rule" that allows you to make a full-year contribution if you have HDHP coverage for December and maintain that coverage for the entire following year. So if you had switched to HDHP coverage starting on or before December 1 of last year, you would be able to make a full $3,450 contribution for 2018 provided you intend to continue with an HDHP for all of 2019. However if your coverage switched on January 1 instead, the 2018 contributions are not available to you.
When I changed jobs in 2013, I was only covered by the HDHP for six months. My accountant for TY 2013 advised me at the time that I could only contribute a pro-rated amount into the HSA. It may have changed, but you'll definitely want to check with a professional about this hypothetical if it's relevant (was this rule implemented with TCJA?). It doesn't sound like it matters in your situation, OP.
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To be more specific, the contribution limit is actually divided in 12 for each month you're an eligible individual (i.e. covered only by HDHP insurance and no other).
If you're covered by an HDHP for all of 2019, you get to make the full $3,500 contribution. If you switch to some other coverage at the end of April, you only get to contribute $1,166.66 ($3,500 / 12 * 4).
Furthermore there's a "last-month rule" that allows you to make a full-year contribution if you have HDHP coverage for December and maintain that coverage for the entire following year. So if you had switched to HDHP coverage starting on or before December 1 of last year, you would be able to make a full $3,450 contribution for 2018 provided you intend to continue with an HDHP for all of 2019. However if your coverage switched on January 1 instead, the 2018 contributions are not available to you.
When I changed jobs in 2013, I was only covered by the HDHP for six months. My accountant for TY 2013 advised me at the time that I could only contribute a pro-rated amount into the HSA. It may have changed, but you'll definitely want to check with a professional about this hypothetical if it's relevant (was this rule implemented with TCJA?). It doesn't sound like it matters in your situation, OP.
seattlecyclone is correct. See Pub. 969.
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I see it now at https://www.irs.gov/pub/irs-pdf/p969.pdf (https://www.irs.gov/pub/irs-pdf/p969.pdf). Thanks for your gentle correction.
Now go save some money, guys!