Can You Change Your Hsa Contribution At Any Time

Did you know that a change of status during the program yr affects the account holder'southward annual Wellness Savings Account (HSA) contribution limit? The post-obit provides an overview of regulations plus examples of how the changes to contribution limits are calculated.

If y'all have an HSA, you are probably aware that you tin change your contribution amount at whatsoever time during the plan twelvemonth, subject to the almanac limit. Annual HSA contribution limits for 2017 are $3,400 for individual coverage and $half-dozen,750 for family coverage (learn more).

Yous may not be enlightened, all the same, that your almanac limit changes when you experience a mid-plan-year alter in status, from individual coverage to family coverage, or vice versa. Here'southward how to summate the changes.

How a Change of Status Affects Annual HSA Contribution Limits

Total Contribution Dominion

Under the "Full Contribution Rule" (IRS Detect 2008-52, published in IRB 2008-25, page 1166), the almanac contribution limit for an HSA tin can increase, just non decrease, due to a change in condition. The rule provides that an HSA-eligible private experiencing a mid-yr status change will accept his or her new annual contribution limit determined by whichever of the post-obit 2 options results in the highest amount:

The annual contribution limit based on bodily HDHP coverage (private or family unit) for each calendar month of the revenue enhancement twelvemonth, calculated monthly, combined and and then divided by 12 to determine the monthly boilerplate; or,

The maximum annual contribution limit for the taxation yr based on actual HDHP coverage (individual or family) as of December 1.

Encounter examples below of both options.

Example: From Family to Individual Coverage

John Smith has family coverage for the 2017 program year and is planning to contribute the $6,750 maximum to his HSA. Even so, starting in September, he switches to individual coverage, which has a $3,400 annual contribution limit. Under the Full Contribution Rule, Smith's new annual contribution limit for 2017 is $five,633.

Hither's why: under option 1, combining viii months of Family coverage and iv months of Individual coverage equals an boilerplate monthly limit of $five,633. Under option two, his new rate would be only $iii,400 because he had Individual coverage every bit of December 1. The 'greater of' provision of the Full Contribution Rule allows him the higher corporeality of $v,633 for that plan yr. Meet the chart beneath.

Month	Annual Limit Based on Coverage Level
Jan	$6,750
February	$half-dozen,750
March	$half-dozen,750
April	$6,750
May	$6,750
June	$6,750
July	$6,750
Baronial	$6,750
September	$3,400
October	$three,400
November	$three,400
Dec	$3,400
Total for all 12 months	$67,600
Annual Limitation (Divide Total by 12)	$5,633

Case: From Private to Family unit Coverage

This is much easier to calculate. John starts with individual coverage, but switches to family unit coverage as of September 1. Option A would result in an almanac limit of $five,633, merely pick B would result in an annual limit of $vi,750. The 'greater of' provision of the Full Contribution Rule allows him the higher amount of $six,750 for that plan yr

Failing to empathise how a mid-year change of status affects your annual HSA contribution limit can result in either accidental backlog contributions or, conversely, lost opportunity to contribute a college amount. Refer IRS Notice 2008-52, published in IRB 2008-25, page 1166, for more than data.