ArmchairMillionaire23
Recycles dryer sheets
My apologies for the long post, but I'll try to include all the relevant details.
On April 19th of this year, I was forced into an early retirement for which I wasn't quite prepared. At that point, I had contributed $1,030.88 to my HSA for this year. ($64.43 per week)
It took 9 weeks for me to find a position with a new employer. I was hired on June 15th. I was not eligible for insurance until I had been employed for 90 days. I was then able to enroll in a new insurance plan on September 13th of this year. (90 days after my hire date)
My new plan has an individual deductible of $6,750 so it appears to definitely be a high-deductible health plan. (HDHP) Unfortunately, my new employer does not offer a Health Savings Account as part of my new insurance plan. I still have my existing HSA from my previous employer which is in a local bank.
After an enthralling hour researching the IRS website, I was able to find this:
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.
You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
You have no other health coverage except what is permitted under Other health coverage, later.
You aren’t enrolled in Medicare.
You can’t be claimed as a dependent on someone else’s 2021 tax return.
According to the above, I should be able to contribute to my existing HSA for the rest of this year. I was trying to figure out if I could contribute the maximum amount allowed for this year ($3,600.00) or if I had to make allowances for the 9 weeks I was unemployed and the additional 90 days I had to wait until I was again covered by an eligible HDHP and then I found this:
Last-month rule. Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), 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 if you didn’t otherwise have coverage.
Testing period. If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month (for example, December 1, 2021, through December 31, 2022).
If you fail to remain an eligible individual during the testing period, for reasons other than death or becoming disabled, you will have to include in income the total contributions made to your HSA that wouldn’t have been made except for the last-month rule. You include this amount in your income in the year in which you fail to be an eligible individual. This amount is also subject to a 10% additional tax. The income and additional tax are calculated on Form 8889, Part III.
So, does this mean that I can make an after-tax contribution of $2,569.12 before the end of the year to bring my HSA contribution up to $3,600.00? I'm planning on "remaining an eligible individual" for all of 2023. I'm hoping I can take that $2,569.12 as a deduction on my 2022 tax return. I would also like to contribute the maximum amount for 2023 as well, even if it has to be after-tax contributions. I have asked my new employer about offering HSA accounts and they're looking into it for next year. I also talked to the local bank with which I have my existing HSA account but the tellers working that day did not have any knowledge of the IRS rules for HSA contributions so that's why I'm posting this here.
Any help and/or advice about this situation would be greatly appreciated.
Thank you.
On April 19th of this year, I was forced into an early retirement for which I wasn't quite prepared. At that point, I had contributed $1,030.88 to my HSA for this year. ($64.43 per week)
It took 9 weeks for me to find a position with a new employer. I was hired on June 15th. I was not eligible for insurance until I had been employed for 90 days. I was then able to enroll in a new insurance plan on September 13th of this year. (90 days after my hire date)
My new plan has an individual deductible of $6,750 so it appears to definitely be a high-deductible health plan. (HDHP) Unfortunately, my new employer does not offer a Health Savings Account as part of my new insurance plan. I still have my existing HSA from my previous employer which is in a local bank.
After an enthralling hour researching the IRS website, I was able to find this:
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.
You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
You have no other health coverage except what is permitted under Other health coverage, later.
You aren’t enrolled in Medicare.
You can’t be claimed as a dependent on someone else’s 2021 tax return.
According to the above, I should be able to contribute to my existing HSA for the rest of this year. I was trying to figure out if I could contribute the maximum amount allowed for this year ($3,600.00) or if I had to make allowances for the 9 weeks I was unemployed and the additional 90 days I had to wait until I was again covered by an eligible HDHP and then I found this:
Last-month rule. Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), 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 if you didn’t otherwise have coverage.
Testing period. If contributions were made to your HSA based on you being an eligible individual for the entire year under the last-month rule, you must remain an eligible individual during the testing period. For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month (for example, December 1, 2021, through December 31, 2022).
If you fail to remain an eligible individual during the testing period, for reasons other than death or becoming disabled, you will have to include in income the total contributions made to your HSA that wouldn’t have been made except for the last-month rule. You include this amount in your income in the year in which you fail to be an eligible individual. This amount is also subject to a 10% additional tax. The income and additional tax are calculated on Form 8889, Part III.
So, does this mean that I can make an after-tax contribution of $2,569.12 before the end of the year to bring my HSA contribution up to $3,600.00? I'm planning on "remaining an eligible individual" for all of 2023. I'm hoping I can take that $2,569.12 as a deduction on my 2022 tax return. I would also like to contribute the maximum amount for 2023 as well, even if it has to be after-tax contributions. I have asked my new employer about offering HSA accounts and they're looking into it for next year. I also talked to the local bank with which I have my existing HSA account but the tellers working that day did not have any knowledge of the IRS rules for HSA contributions so that's why I'm posting this here.
Any help and/or advice about this situation would be greatly appreciated.
Thank you.