Last Month Rule - I started my HSA in July of 2016 along with my HDHP. How do I answer the Last Month Rule - yes or no?

[avazqu12]

I was on my father's health care plan, but aged out in July as I turned 26. My HDHP/HSA coverage started 7/30/2016, I made contributions each month and still have the plan today. I'm not certain if this qualifies me for the last month rule. Any guidance would be appreciated.

[DanielV01]

You answer yes, unless you do not have an HDHP plan for 2017.  Since you did not have your HDHP on Jan. 1, you can still qualify to have the full HSA deduction for the year under this rule.  (3350 single, 6700 family).  You will, however, need to maintain the coverage until June 30 (one full year) in order to maintain that status, and not have to pay any penalties.

If you do not have an HDHP in 2017, answer no.  You will still be able to claim half of your full contribution (1675 single, 3350 family) for the year.  Here is information on this on the IRS website:  https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204045