Recently laid off. Benefits will end in two weeks. I know you can use what is in HSA account for medical expenses after termination, can you add funds?

[dmertz · Accepted solution]

Your total HSA contributions for 2019 are limited to the 2019 full-year HSA contribution limit prorated for the number of months that you are HSA eligible in 2019, i.e., you had qualifying HDHP coverage on the first of the month and no other, disqualifying coverage.  HSA contributions can be either through payroll deduction or made directly as personal contributions, with personal contributions being deductible on your tax return.  The deadline for making HSA contributions for 2019 is April 15, 2020.

[Anonymous]

So while we still have the benefits, we can make additional contributions to the HSA up to the maximum family amount allowed? So let's say that we had previously contributed $2,600 to the family HSA, used $2,500 for qualifying medical expenses, we could, during that two week period contribute the balance of the $7,000 ($3,400) to the HSA and use that for our continuing 2019 medical expenses, correct?

[dmertz]

If by "benefits" you are referring to the High Deductible Health Plan (HDHP), you can make contributions for  those months you are covered by the plan, but you can make that contribution up until the regular due date of your tax return.  You do not have to be covered by the plan at the time you actually make the contribution.

You do not have a "family HSA," you have family HDHP coverage that permits you to contribute to an HSA subject to the contribution limit for having family HDHP coverage.  The amount an individual under age 55 with family HDHP coverage and contribute for 2019 $7,000 / 12 = $583.33 for each month that the individual is covered by the family HDHP coverage on the first of the month.  So if the last day of your HDHP coverage is July 31, you will have been covered for the first 7 months of the year, allowing you a total contribution for 2019 of $4,083.33, split in any manner between payroll deductions and personal contributions.  What you take out of the HSA is irrelevant.  If you obtain other HDHP coverage later in 2019 (by December 1) or you extend your current HDHP coverage under COBRA, you'll be able to contribute more since you'll have HSA-eligible coverage for additional months of 2019.

[Anonymous]

Thanks for your previous response. I picked up COBRA on the HDHP and plan to stay on that until I get back to work. For each month I am on COBRA on it can I continue to contribute the monthly amount to the HSA attached to the HDHP? Or is that only useful while I was under the plan originally?

Audra

[BMcCalpin]

Yes, for any month, as dmertz said above, that you have HDHP coverage on the first of the month (and no conflicting coverage), then you can contribute to your HSA, subject to the annual HSA contribution limit.

Your HSA is not "attached" to your HDHP policy; your HSA is an independent financial account similar in many ways to an IRA - that is, it belongs to you, not your employer. So as long as you have HDHP coverage from any source (employer, COBRA, even self), you can use that month to count towards calculating your annual HSA contribution limit (see dmertz's comment above). Whether or not you can contribute depends on how close you are to that limit at any given time.

[BMcCalpin]

***I edited the second paragraph above***