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mom-riggs
New Member

Should I answer yes or no on the last month rule question? I had HDHP coverage through my employer until the end of June.

I did not contribute more than is allowed.
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PaulaM
Expert Alumni

Should I answer yes or no on the last month rule question? I had HDHP coverage through my employer until the end of June.

The question is referring to 2015. If you contributed in 2015 under last month rule, then you would have to maintain HDHP coverage for all of 2016 to not incur a penalty. Answer 'yes' if this was your case.

If you were enrolled in a HDHP/HSA for all of 2016, then you would answer 'No'. 

If you were enrolled in HDHP/HSA for part of 2016, then the answer is still 'No', but you will need to indicate which months that you were covered by an HDHP on the page, Were you enrolled in a High Deductible Health Plan (HDHP) in 2016? Penalties may be calculated if you contributed more than allowed for the number of months covered.

See attached example.

https://www.irs.gov/pub/irs-pdf/p969.pdf 

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2 Replies
PaulaM
Expert Alumni

Should I answer yes or no on the last month rule question? I had HDHP coverage through my employer until the end of June.

The question is referring to 2015. If you contributed in 2015 under last month rule, then you would have to maintain HDHP coverage for all of 2016 to not incur a penalty. Answer 'yes' if this was your case.

If you were enrolled in a HDHP/HSA for all of 2016, then you would answer 'No'. 

If you were enrolled in HDHP/HSA for part of 2016, then the answer is still 'No', but you will need to indicate which months that you were covered by an HDHP on the page, Were you enrolled in a High Deductible Health Plan (HDHP) in 2016? Penalties may be calculated if you contributed more than allowed for the number of months covered.

See attached example.

https://www.irs.gov/pub/irs-pdf/p969.pdf 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Fern
New Member

Should I answer yes or no on the last month rule question? I had HDHP coverage through my employer until the end of June.

What is the Last Month Rule:
If you are an eligible individual on the first day of the last month of the tax year (December 1), you are considered an eligible individual for the entire year. You are treated as having the same HDHP coverage for the entire year as you had on the first day of the last month. This allows certain taxpayers to claim HSA contributions even if they did not have HSA all year.

If you make an HSA contribution because you qualify under the last month rule, then the next tax year, you must remain an eligible individual for the entire year. This means that you must maintain a HDHP for the whole subsequent year.

Responding in Turbo Tax:

Answer No
- If  you had a HDHP coverage all year then the last month rule does not apply.
- If you were enrolled in HDHP/HSA for part of 2016, then the answer is still 'No', but you will need to indicate which months that you were covered by an HDHP on the page, Were you enrolled in a High Deductible Health Plan (HDHP) in 2016? Penalties may be calculated if you contributed more than allowed for the number of months covered.

Answer Yes
- If you contributed in 2015 under last month rule, then you would have to maintain HDHP coverage for all of 2016 to not incur a penalty. Answer 'yes' if this was your case.
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