The last-month rule applies to how you determine your annual HSA contribution limit. It says simply that is you had HDHP (High Deductible Health Plan) coverage on December 1 of a year, then you can use the full annual HSA contribution limit regardless of how few months you had the coverage during the year.
The reduction in employer HSA contributions is just that: a reduction.
You might consider increasing his payroll contribution to the HSA to make up fro the shortfall if his employer allows that. Otherwise you might make a direct contribution directly to the HSA. However, making contributions through payroll is better because you not only avoid federal income tax, but you also avoid Social Security and Medicare taxes on the contribution as well.
[Edited 3/24/2020 2:22 pm CDT - corrected typos]
The last-month rule applies to how you determine your annual HSA contribution limit. It says simply that is you had HDHP (High Deductible Health Plan) coverage on December 1 of a year, then you can use the full annual HSA contribution limit regardless of how few months you had the coverage during the year.
The reduction in employer HSA contributions is just that: a reduction.
You might consider increasing his payroll contribution to the HSA to make up fro the shortfall if his employer allows that. Otherwise you might make a direct contribution directly to the HSA. However, making contributions through payroll is better because you not only avoid federal income tax, but you also avoid Social Security and Medicare taxes on the contribution as well.
[Edited 3/24/2020 2:22 pm CDT - corrected typos]