Question: An employee who began the year in employee-only HDHP coverage was recently married and enrolled her new spouse mid-year. What is the HSA contribution limit for HSA-eligible individuals enrolled part of the year in employee-only HDHP coverage, and part of the year in family HDHP coverage?
Compliance Team Response:
The HSA contribution limits are calculated on a monthly basis. This means the employee is able to contribute 1/12 of the employee-only limit for the months of the year in employee-only HDHP coverage, and 1/12 of the family limit for the months of the year in family HDHP coverage.
The employee’s overall annual contribution limit is the sum of those two prorated employee-only and family contribution numbers.
You look to the coverage in effect as of the first day of each calendar month to determine whether the employee has employee-only or family HDHP coverage for that month
The IRS has a chart to handle this calculation on page four of the Form 8889 Instructions. You just need to adjust the numbers for the current-year contribution limits.
For more details on how the HSA contribution limit applies in other situations, see slides 11-18 of our Newfront Office Hours webinar Go All the Way With HSA: Everything HDHP/HSA You Need to Know.
IRS Form 8889 Instructions:
(2) Monthly limitation.
The monthly limitation for any month is 1/12 of—
(A) in the case of an eligible individual who has self-only coverage under a high deductible health plan as of the first day of such month, $2,250.
(B) in the case of an eligible individual who has family coverage under a high deductible health plan as of the first day of such month, $4,500.
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