My employer's benefit year runs from December 1 to November 30 every year. In 2018, they introduced an HDHP/HSA option. I opted into this for a family plan. My employer made a $1,000 contribution on December 1, but I did not start making my own contributions out of my paycheck until January 2019.
On December 1 of this year (2019), I will be switching to a non-HDHP option, which I understand would invalidate any last month rule contributions made. My understanding is that will have been allowed to contribute $575 for December 2018 ($6,900/12) and $6,416 ($7,000/12 x 11 months) for January through November 2019. Based on this, will I be facing a penalty because my employer's $1,000 contribution in December 2018 is greater than $575, and thus is subject to last month rule eligibility?
Our HSA provider is telling me that my situation does NOT violate last month rule eligibility, but I'm not sure I understand why. Does anyone have any insight?
