Author Topic: HSA contributions - check my math  (Read 1495 times)

FiguringItOut

  • Pencil Stache
  • ****
  • Posts: 742
  • Location: NYC
HSA contributions - check my math
« on: April 28, 2017, 09:02:02 AM »
I am currently covered by COBRA from my prior employer.  In 2017 I was on a self+children plan for Jan, Feb, and March.  Starting April 1st my children were removed from my plan and I am on self plan right now.
At my current employer I can enroll into health coverage effective June 1st.

Since COBRA allows for 30 days to have monthly premium paid, I am not gong to pay for my May coverage unless something happens that would require medical attention.  Since I will be enrolling into my work health plan starting in June, I think I could save May premiums and have 1 months gap in health coverage.  I plan to enroll into HSA plan at work.

So for HSA, I think I can contribute a total of $3954 for 2017.
- 3 months of family coverage ($6,750/yr for 3 months is $1,688)
- 8 months of single coverage ($3,400/yr for 9 months is $2,267)
for a total of 11 month coverage.

Is this correct?





Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: HSA contributions - check my math
« Reply #1 on: April 28, 2017, 09:36:32 AM »
I'm not sure how it works at the beginning of the year, but I added my step son to my HSA insurance in December of last year and was allowed to contribute to the entire $6750 for 2016.

I'm pretty sure the contribution is either or not a combination of both.  Can you not put 1 or more children back on the plan in June?


https://thefinancebuff.com/hsa-contribution-limit-two-plans-mid-year-changes.html


Apparently it's called the last month rule and it locks me into being on an HSA qualifying plan for the entire 2017 year.  If you plan to stay at your employer through all of 2018 you could re-add a child in December 1st and contribute to the full cap.
« Last Edit: April 28, 2017, 09:40:54 AM by Heroes821 »

FiguringItOut

  • Pencil Stache
  • ****
  • Posts: 742
  • Location: NYC
Re: HSA contributions - check my math
« Reply #2 on: April 28, 2017, 09:48:52 AM »
I'm not sure how it works at the beginning of the year, but I added my step son to my HSA insurance in December of last year and was allowed to contribute to the entire $6750 for 2016.

I'm pretty sure the contribution is either or not a combination of both.  Can you not put 1 or more children back on the plan in June?

My ex put them on his insurance since his new employer covers 100% of his deductible and a good portion of copays for non-HDHP plan and his premiums are pretty low for employee+children.  My current employer has premiums of close to $900 for employee+children option with $4K deductible.  I was paying $680 for children on my COBRA.  As much as I love maxing out HSA account, having children on his plan makes better sense all around.  One of the kids managed to use up my high deductible of $3.5K all by herself in the last two years very early in both years and then miraculously not being sick at all for the rest of the year.  The other kid and myself rarely use doctors.  I'm grateful that I was able to cover those costs out of pocket and not use HSA plus my ex paid half of used up deductible, but still, it just makes more sense to keep kids on cheaper plan with him.  I should have none or very minimal expenses reimbursing him for 50% of kids' medical copays.









terran

  • Handlebar Stache
  • *****
  • Posts: 2025
Re: HSA contributions - check my math
« Reply #3 on: April 28, 2017, 09:58:29 AM »
My Assumption would be that if you never pay your COBRA premiums, then you never actually had COBRA insurance (thus essentially uninsured during the time you we "on" COBRA). I have no actual evidence to back this up, and I will be in a similar situation soon (HSA plan and COBRA that I hopefully won't pay the premiums on), so I would also be curious if anyone else has any actual knowledge of this?



MDM

  • Walrus Stache
  • *******
  • Posts: 9499
Re: HSA contributions - check my math
« Reply #6 on: April 28, 2017, 11:27:31 AM »
Non-IRS web sites aren't always correct.  In this case the previous links do seem correct, but if one wants the IRS version see 2016 Publication 969 - p969.pdf:
Quote
if you...changed your coverage during the year, your contribution limit is the greater of:
1.  The limitation shown on the Line 3 Limitation Chart and Worksheet in the Instructions for Form 8889,
Health Savings Accounts (HSAs), or
2.  The maximum annual HSA contribution based on your HDHP coverage (self-only or family) on the first
day of the last month of your tax year

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: HSA contributions - check my math
« Reply #7 on: April 28, 2017, 11:43:51 AM »
To be safe I would only contribute to the single cap in my opinion.

MDM

  • Walrus Stache
  • *******
  • Posts: 9499
Re: HSA contributions - check my math
« Reply #8 on: April 28, 2017, 11:59:44 AM »
To be safe I would only contribute to the single cap in my opinion.
Why would you not follow the IRS instructions that allow a greater contribution?

Heroes821

  • Pencil Stache
  • ****
  • Posts: 566
Re: HSA contributions - check my math
« Reply #9 on: April 28, 2017, 12:06:03 PM »
To be safe I would only contribute to the single cap in my opinion.
Why would you not follow the IRS instructions that allow a greater contribution?

My employer over contributed to my HSA in 2015 and the extra steps I had to take tax wise to deal with that for me where frustrating.  The HSA company also sent me an incorrect 1098? w/e form the HSA is and then after over an hour on the phone they basically said they can't fix the paperwork until end of 2017 when they make new paperwork for 2017 tax season, but that my CPA and I should trust them that I did everything correctly and to put on the tax return the full amount of contributions for 2016.  I'm still confused by it.