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I enrolled in an HSA in August of 2017. Only coverage prior was VA. How do I answer what type of HDHP did I have in 2017? Self only every month of the year?

My confusion is that it states that I had to have an HDHP before having an HSA. This is the reason I selected that I had an HDHP during at least one month of the year. Selecting I did not have coverage seems more logical. Thank you for any clarification provided.

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1 Best answer

Accepted Solutions
DanielV01
Expert Alumni

I enrolled in an HSA in August of 2017. Only coverage prior was VA. How do I answer what type of HDHP did I have in 2017? Self only every month of the year?

It depends.  First and foremost, you need to make sure you qualified to have an HSA.  To have an HSA, you can only have had and HDHP plan when you started to make contributions to the HSA.  If this was not the case (you still had VA insurance at the same time you had the HDHP), then you will want to contact your plan administrator of your HSA and request and excessive contribution withdrawal or you will pay penalties on your tax return for a disallowed contribution to your HSA.  However, if you no longer qualified for VA insurance, then you actually have an option of how to claim your HDHP year, which can affect how much you were allowed to contribute to the year.  So much will depend on your situation.  See the following:

  • Option 1, self-only coverage all year.  Even though you acquired the HDHP in August, you are allowed to claim that status as long as you reasonably anticipate that by August 1, 2018, you still have the plan.  This is refered to as the last-month rule which allows you to treat this year as having had the HDHP all year, allowing you to claim up to the full $3400 contribution to your HSA in 2017 (and you can contribute an additional maximum in 2018 as well).  The one drawback would be if you were to lose HSA eligibility before the year is completed, in which case any contribution (see option 2 below) would be an excess contribution that would be penalized as a disallowed contribution.
  • Option 2, self-only coverage for only the months you had HDHP coverage.  If you choose this option, you are only allowed to take a prorated amount of the $3400 deduction for the year ($3400*5/12=1416.67),  Any amount higher than this would be an excess contribution if you choose this option. However, you will not face any implications for what may or may not happen to your HDHP in 2018, because you are not applying the last-month rule.

Your situation would hinge on whether you contributed 1417 or more to your HSA.  If you did, you will want to claim your HDHP for the entire year.  If you did not, and do not plan to make additional contributions to your 2017 tax year, then you probably only want to state that you had HDHP coverage since August, since stating it this way has no effect on your 2017 return and protects your 2018 return if you should disqualify for whatever unforeseen reason to have HDHP insurance.

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3 Replies
DanielV01
Expert Alumni

I enrolled in an HSA in August of 2017. Only coverage prior was VA. How do I answer what type of HDHP did I have in 2017? Self only every month of the year?

It depends.  First and foremost, you need to make sure you qualified to have an HSA.  To have an HSA, you can only have had and HDHP plan when you started to make contributions to the HSA.  If this was not the case (you still had VA insurance at the same time you had the HDHP), then you will want to contact your plan administrator of your HSA and request and excessive contribution withdrawal or you will pay penalties on your tax return for a disallowed contribution to your HSA.  However, if you no longer qualified for VA insurance, then you actually have an option of how to claim your HDHP year, which can affect how much you were allowed to contribute to the year.  So much will depend on your situation.  See the following:

  • Option 1, self-only coverage all year.  Even though you acquired the HDHP in August, you are allowed to claim that status as long as you reasonably anticipate that by August 1, 2018, you still have the plan.  This is refered to as the last-month rule which allows you to treat this year as having had the HDHP all year, allowing you to claim up to the full $3400 contribution to your HSA in 2017 (and you can contribute an additional maximum in 2018 as well).  The one drawback would be if you were to lose HSA eligibility before the year is completed, in which case any contribution (see option 2 below) would be an excess contribution that would be penalized as a disallowed contribution.
  • Option 2, self-only coverage for only the months you had HDHP coverage.  If you choose this option, you are only allowed to take a prorated amount of the $3400 deduction for the year ($3400*5/12=1416.67),  Any amount higher than this would be an excess contribution if you choose this option. However, you will not face any implications for what may or may not happen to your HDHP in 2018, because you are not applying the last-month rule.

Your situation would hinge on whether you contributed 1417 or more to your HSA.  If you did, you will want to claim your HDHP for the entire year.  If you did not, and do not plan to make additional contributions to your 2017 tax year, then you probably only want to state that you had HDHP coverage since August, since stating it this way has no effect on your 2017 return and protects your 2018 return if you should disqualify for whatever unforeseen reason to have HDHP insurance.

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

I enrolled in an HSA in August of 2017. Only coverage prior was VA. How do I answer what type of HDHP did I have in 2017? Self only every month of the year?

Thank you so much for your insight. I will contact my administrator Monday and find out more. I wasn't expecting to get such a detailed response. It's certainly appreciated.
DanielV01
Expert Alumni

I enrolled in an HSA in August of 2017. Only coverage prior was VA. How do I answer what type of HDHP did I have in 2017? Self only every month of the year?

You're very welcome.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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