I forgot to mention that the $425 is also subject to ordinary income tax on your 2019 tax return. All contributions, including those made by your employer, are made on your behalf no matter who makes the deposit and are pre-tax money in the HSA, so they factor equally into figuring the consequences on the tax return for the year in which you failed to complete the last-month rule testing period. In this case your employer excluded the $1,000 HSA contribution amount from boxes 1, 3 and 5 of your 2018 W-2, so the $425 needs to be taxed the same on your 2019 tax return as if you had made the contribution yourself for 2018 and had received a deduction for that contribution.
