Q: We see Zachariah had a break in HDHP health plan during 2017. My husband was covered the entire year. Why is it telling me this?

[BMcCalpin · Accepted solution]

If you are getting this message near the end of the interview (after the HSA Summary screen) on the screen that is entitled "What type of High Deductible Health Plan did [name] have on December 1st [previous tax year]?" (see screenshot below), then IF you had coverage for all of the previous tax year, you can safely answer "None". This will avoid the next screen indicating that you had a break in coverage, but otherwise will not affect your return.

The purpose for the question is to determine if you used the "last month rule" in that previous tax year. This rule allows you to use the full annual HSA deduction even if you started the HSA sometime during the previous tax year (but no later than December 1st). The catch with the last month rule is that you have to stay in the HSA for all of the following 12 months (i.e., the current tax year), or pay penalties.

But if your spouse did not have an HSA in the previous tax year or did have an HSA but didn't contribute to it, then this doesn't apply to to your spouse, so you can just skip it by answering "none" in this one case.

[Edited 3/11/2020 3:29 pm CDT ]