HSA Contribution deduction? Last month of year rule?

[sam992116]

Lets say I enrolled in HSA compatible High deductible Health insurance in Aug. 2021. Never ever had High deductible insurance or HSA account.

I was told my HSA administrator, even though I will have HSA compatible Health Insurance for 5 month for year 2021 but I can still contribute full amount of $3600 for year 2021 if my intent is keep this High deductible plan for whole of next year 2022.

Q1. I will be fine from tax or over contribution point of view if I contributed $3600 for year 2021? Question I am trying to ask is did I over fund HSA in year 2021?

Q2. Do I have to keep my current or any HSA compatible high deductible plan for whole of 2022?

Q. What will happen if switch to non HSA plan in year 2022?

Q. This part I did NOT understand why I have keep HSA compatible High deductible Insurance through out year 2022?

[Mike9241 · Accepted solution]

Q1. I will be fine from tax or over contribution point of view if I contributed $3600 for year 2021? Question I am trying to ask is did I over fund HSA in year 2021? NO overcontribution if your on a qualified HDHP for all of 2022

Q. What will happen if switch to non HSA plan in year 2022?,  you mean non HDHP. you would need to include $2100 in income (the excess contribution) plus pay a 10% penalty

amount contributed $3600. allowed contribution $300/month for 5 months Aug - Dec) = $1500  results in $2100 excess 

Q. This part I did NOT understand why I have keep HSA compatible High deductible Insurance through out year 2022? that the requirement of you use the LMR to make a full year's contrintuion.