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Level 5
posted Feb 20, 2025 3:17:20 PM

HSA HDPD December

My son started his HSA account in April 2024. It is a HDHP.

 

We noticed that if December is checked and no other months are checked as "Self Only" HDHP coverage the MAX contribution is $4,150, but if April through November is checked another max contribution limit about half of the $4,150 is calculated.

 

I guess we are confused as to why if only December is checked the Max Contribution Limit ($4,150) is calculated?

0 2 1569
1 Best answer
Employee Tax Expert
Feb 20, 2025 3:39:36 PM

This is because of the Last-month rule. You are considered to be an eligible individual for the entire year if you have coverage on the first day of the last month of the tax year. If you lose your right to coverage in the following year, however, you may need to include in income some of the HSA deductions you took. You can learn more from IRS Publication 696.

 

2 Replies
Employee Tax Expert
Feb 20, 2025 3:39:36 PM

This is because of the Last-month rule. You are considered to be an eligible individual for the entire year if you have coverage on the first day of the last month of the tax year. If you lose your right to coverage in the following year, however, you may need to include in income some of the HSA deductions you took. You can learn more from IRS Publication 696.

 

Level 5
Feb 20, 2025 4:07:08 PM

Thanks for the quick response.  That was a big help!