Max HSA contribution
I was eligible for an HSA the entire 2014 year but only opened up my individual account in August 2014. Can I contribute the max or do I have to prorate?
Also appears that I only can pay eligible medical expenses from HSA after the date I opened my HSA account and not be reimbursed from the beginning of the year?
Seems like the tax writeoff is not taken on the contribution amount but on the distribution on form 1099 SA?
Permalink Submitted by Alan - IRA critic on Fri, 2014-12-12 18:05
Under the “last month rule” if you maintained a qualified HDHP plan on 12/1, you can be treated as if you were eligible all year with respect to contributions. You can therefore make your full annual contribution limit for 2014 and avoid pro rating. However, there is a testing period for continued HDHP coverage for 12 months in 2015 that you must meet. Qualified medical expenses paid from your HSA account must be incurred on or after you opened the HSA. You cannot reimburse yourself for bills you paid on expenses incurred prior to the date of the HSA.See p 5 and p 8 of Pub 969: http://www.irs.gov/pub/irs-pdf/p969.pdf
Permalink Submitted by David Mertz on Fri, 2014-12-12 21:21
It sounds like gg80108 had an HDHP for the entire year, so there is no need to invoke the last-month rule and therefore the testing-period does not apply. The maximum permissible HSA contribution is based on full-year participation in the HDHP. The an HSA contribution that you make yourself for 2014 is deductible on 2014 Form 1040 line 25 and distributions from the HSA for qualifed medical expenses incurred after the establishment of the HSA account will be tax free.