Starting a new job on Dec 13; had FSA at previous employer; can I sign up for HDHP and contribute to HSA for the rest of 2021?

[ladyj]

Can someone please provide some clarification on whether I will be able to elect an HDHP at my new job and if I can contribute to an HSA for the remainder of the year if I start my new job on Dec 13, 2021?  If so, is there a maximum amount that I can contribute?  I had an all purpose FSA at my previous employer and I've used up the funds.

[Opus 17]

No, you can’t contribute into the HSA for 2021. Eligibility is determined based on your medical coverage on the first day of the month. If you did not have qualifying medical coverage on December 1, 2021, then you can’t make any contributions for 2021.

If, by some miracle, the medical coverage of your new job is retroactive to December 1, you could use the last month rule to contribute the full amount for 2021, which would be $3650 if you are enrolled in a single HDHP, and $7300 if you are enrolled in a family HDHP. To use the last month rule, you must be covered on December 1 and you must keep your coverage for the entirety of the following year (2022). If you lose your coverage during 2022, your last month rule contributions will be retroactively deemed ineligible and you will be assessed a penalty on your 2022 tax return. 

[ladyj]

Thank you @Opus 17 !  May I also ask if that prevents me from choosing to do a HDHP medical insurance plan though and just not contribute to the HSA? Thanks again for your help. I appreciate it.

[Opus 17 · Accepted solution]

@ladyj 

You can enroll in any insurance plan that is offered by your employer.  And if you enroll in a qualifying HDHP, you could begin making HSA contributions starting January 1, 2022, as long as you don’t have any other coverage that would block your eligibility, such as an FSA or a spouse’s medical coverage.

[ladyj]

@Opus 17 Thank you so much!  Happy Holidays!