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Level 2

Last month rule for HSA

I used the last month rule in 2018 for family HDHP coverage and filed my return timely. That family included myself, my spouse, and my college student/still a dependent daughter. My spouse is older than I am, and due to unexpected circumstances he will be claiming Medicare Part A in early 2020 which will retroactively become effective 11.1.19. Thus, since he turned 65 in November of 2019, he is no longer eligible for HDHP/HSA under "family". 


My question-- since my daughter and I are still under "family"coverage and she will again be a dependent for 2019 do we pass the last month testing period (even though my spouse is not eligible)? Together she and I will have had continuous HDHP coverage from 10.1.18 through and including 12.31.19? Help is appreciated on this obscure topic.

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Level 8

Last month rule for HSA

@Confused15  The last month rule applies to the owner of the HSA only. As you indicate that you (the owner of the account) will maintain family HDHP coverage through December 31, 2019, the testing period for the last-month rule (taken in 2018) will be satisfied. Your spouse's eligibility does not apply unless the HSA in question is in their name.

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Level 15

Last month rule for HSA

Even if you failed to complete the testing period there would be no change required on your 2018 Form 8889.  Failure to complete the testing period would be handled on the Form 8889 for the year in which the failure occurred, but since you will be telling 2019 TurboTax that you were covered for all of 2019 and that you yourself were not covered by Medicare, TurboTax will not ask anything about your insurance coverage in 2018.

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6 Replies
Level 8

Last month rule for HSA

@Confused15  Is this HSA in your name or your older spouse's name?

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Level 15

Last month rule for HSA

From the details of your question I assume that the contribution for 2018 was made to your own HSA, not to your spouse's HSA.  If that assumption is correct, yes, if you yourself remain an HSA-eligible individual through December 31, 2019, you will have completed the testing period for your use of the last-month rule in 2018.

 

It doesn't matter whose name the insurance policy is in as long as you are covered.

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Level 2

Last month rule for HSA

Hi ghost!  The HSA is in my name.  I'm hoping having my daughter in the HDHP plan all of 2019 (even though the husband is Medicare A on 11.1.19) makes this continuation of family HSA coverage funded in the fourth quarter of 2018 still eligible for our joint tax return pass the test! That would be such a blessing. Figuring out what I need to do for 2018, if anything (don't amend 8889)? Thanks so much in advance.

Highlighted
Level 8

Last month rule for HSA

@Confused15  The last month rule applies to the owner of the HSA only. As you indicate that you (the owner of the account) will maintain family HDHP coverage through December 31, 2019, the testing period for the last-month rule (taken in 2018) will be satisfied. Your spouse's eligibility does not apply unless the HSA in question is in their name.

View solution in original post

Highlighted
Level 15

Last month rule for HSA

Even if you failed to complete the testing period there would be no change required on your 2018 Form 8889.  Failure to complete the testing period would be handled on the Form 8889 for the year in which the failure occurred, but since you will be telling 2019 TurboTax that you were covered for all of 2019 and that you yourself were not covered by Medicare, TurboTax will not ask anything about your insurance coverage in 2018.

View solution in original post

Highlighted
Level 2

Last month rule for HSA

Thanks for confirming ghost! Blessings on the upcoming day of thankfulness!