The HSA Contribution Rules: Part I

By Brian Gilmore | Originally posted on Newfront

Question: What are the HSA contribution rules for different situations such as employee-only coverage, family coverage, catch-up eligible employees, employees who lose HSA eligibility mid-year, and employees who gain HSA eligibility mid-year?

Short Answer: In general, there are different HSA contribution limits based on employee-only vs. family coverage, whether the employee is age 55+, and the number of months in the year for which the individual is HSA-eligible. There is also a special rule referred to as the last-month rule that provides additional options for those gaining HSA-eligibility mid-year.

Starting Point: Only HSA-Eligible Individuals Can Establish and Contribute to an HSA
Health Savings Account (HSA) eligibility is required for any individual to open and make contributions to an HSA (e.g., through the employer’s payroll or as a direct deposit) or receive contributions to an HSA (e.g., the employer contribution made available to employees enrolled in the HDHP).

Individuals must satisfy the following four requirements to be HSA-eligible:

  1. Be covered by a qualified high deductible health plan (HDHP);

  2. Have no other disqualifying health coverage;

  3. Not be enrolled in any part of Medicare; and

  4. Not be able to be claimed as a dependent on someone else’s current-year tax return.

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