How to Prorate Your Contribution When You're Not Eligible All Calendar Year
By William G. Stuart | Originally posted on LinkedIn for Health Savings Academy
This column is an excerpt (Question 62) from a book to be published later this year to help guide account owners, employers, benefits managers, and administrators understand Health Savings Account compliance issues. The format consists of a common question, an explanation in easy-to-understand English (often with an appropriate example), and a citation from government documents to support the answer. The book is designed to inform. It is not a legal document, and the contents should not be construed as legal advice.
Question: How do I calculate my maximum contribution if I lose my Health Savings Account eligibility during the calendar year?
Answer: You must prorate your Health Savings Account contribution if you do not satisfy all eligibility requirements prior to Dec. 1.
The math is straightforward. Divide the statutory maximum annual contribution for your contract type (self-only or family) by 12 and multiply that figure by the number of months that you’re HSA-eligible.
Example: You are age 55 or older, are covered on a self-only plan, and no longer meet all eligibility requirements as of Sept. 8, 2025. You were HSA-eligible on the first day of January, February, March, April, May, June, July, August, and September – a total of nine months. Your monthly contribution limit is $358.33 ($4,300 divided by 12 months). Multiply that figure by nine because you were HSA-eligible for nine months. Your maximum contribution is $3,225. You can make a prorated catch-up contribution as well. You can contribute $83.33 ($1,000 divided by 12 months) per month that you were eligible, or $750, for a total prorated contribution of $3,975.
If you haven’t yet contributed up to whichever pro-rata figure applies, you can continue to deposit funds to that level until the deadline to file your personal income tax return that year.
If you’ve contributed more than that amount, you can work with your Health Savings Account provider to remove any contributions beyond the prorated amount (and any earnings associated with those excess deposits) and include them in your taxable income for the year. If you make the adjustment before filing your tax return, you don’t face any penalties.
If you’ve spent most of or all your balance and can’t remove funds equal to the excess contribution, you still must include the amount of the excess contribution in your taxable income. You pay the 10% penalty on any portion of the excess contribution that you can’t remove from the account because you have an insufficient balance.
Calculating your maximum contribution for 2024
Self-only coverage: $345.83 times the number of eligible months (if you're age 55 or older, the monthly figure increases to $429.16).
Family coverage: $691.66 times the number of eligible months (if you're age 55 or older, the monthly figure increases to $775).
Note that once you're age 55, you're permitted to make an annual $1,000 catch-up contribution. The prorated amount of that contribution ($83.33 monthly) is added to the statutory limit to determine your maximum contribution. If you're a spouse who makes only the catch-up contribution, your limit is $83.33 times the number of eligible months.