Is HSA testing period apply to my case?

[danilol]

Hello,

In 2024, from January to August I have my HSA account and make contribution through my paycheck. I lost my job in September, I keep my original HDHP plan with no change and continue it through COBRA. My wife does not work . She  will have her new job in November and her company offers family health plan but is not HDHP. We plan to switch to her company offered health plan in November. I am over 55 years old. limitation for HSA contribution in 2024 is $9300.  So far I have made $6600( January to August) contribution already.

questions regarding HSA:

1. Can I still make contribution in September and October by myself? what is the max amount that I can make for these two months?

2. If I can not use up all money in my HSA account in 2024, can I use them to pay my medical expense next year? even when I do not have HDHP next year?

3. Do I need to meet testing period? Which I do not think it applicable to my case because the   contribution I made is not   based on being eligible the entire year under  the last month rule. Is that correct?

Thanks.

[dmertz · Accepted solution]

If you switch to a non-HDHP plan beginning November 1, you will have been eligible for 10 months of the year.  Allocating all of the regular family contribution limit to your contributions, your maximum contribution for 2024 will be 10/12 of $9,300 =  $7,750.  You have until April 15, 2025 to complete the contributions via personal contributions.  If your spouse is over age 55 in 2024, your spouse can also contribute 10/12 of $1,000 = $833.33 to your spouse's HSA (not to your HSA) via personal contributions).

There is no testing period.  You are not using the last-month rule and are not making an HSA funding distribution from an IRA for which there would be a testing period.

You can use distributions from the HSA to cover any qualified medical expense.  Qualified medical expenses are those for you, your spouse or your dependents which are incurred anytime after the establishment of the HSA.  In general, the HSA is established upon the first permissible deposit into the HSA.  You do not have to have an HDHP to make distributions from the HSA to cover qualified medical expenses.  (Note that your COBRA payments are qualified medical expenses should you choose to cover those with distributions from your HSA.)

[Bsch4477]

If you are covered by a HDHP through October you can contribute to your HSA. The allowable total contribution is based on the number of months you were covered so in your case you would divide your annual allowable amount by 10/12.  Your HSA is portable so you have it as long as you want even though you can’t contribute to it because you no longer have the HDHP. You can pay any qualifying medical expenses going forward. 

[Opus 17]

Once you have money in an HSA, you can spend it for qualified medical expenses for yourself, your spouse and your dependents, even if you are no longer allowed to make contributions.