Publication 969 - Health Savings Accounts And Other Tax-Favored Health Plans

Limit on Contributions

Chris fails to be an eligible individual in June 2011.

Because Chris did not remain an eligible individual during

The amount you or any other person can contribute to your

the testing period (December 1, 2010, through December

HSA depends on the type of HDHP coverage you have,

31, 2011), he must include in his 2011 income the contribu-

your age, the date you become an eligible individual, and

tions made in 2010 that would not have been made except

the date you cease to be an eligible individual. For 2010, if

for the last-month rule. Chris uses the worksheet for line 3

you have self-only HDHP coverage, you can contribute up

in the Form 8889 instructions to determine this amount.

to $3,050. If you have family HDHP coverage, you can

January . . . . . . . . . . . . . . .

-0-

contribute up to $6,150.

February . . . . . . . . . . . . . .

-0-

For 2011, if you have self-only HDHP coverage,

March . . . . . . . . . . . . . . . .

-0-

you can contribute up to $3,050. If you have

TIP

April . . . . . . . . . . . . . . . . .

-0-

family HDHP coverage you can contribute up to

May . . . . . . . . . . . . . . . . . .

-0-

$6,150.

June . . . . . . . . . . . . . . . . .

-0-

If you were, or were considered (under the last-month

July . . . . . . . . . . . . . . . . . .

-0-

rule, discussed later), an eligible individual for the entire

August . . . . . . . . . . . . . . .

-0-

year and did not change your type of coverage, you can

September . . . . . . . . . . . .

-0-

contribute the full amount based on your type of coverage.

October . . . . . . . . . . . . . . .

-0-

However, if you were not an eligible individual for the entire

November . . . . . . . . . . . . .

-0-

year or changed your coverage during the year, your

December . . . . . . . . . . . . .

$6,150.00

contribution limit is the greater of:

Total for all months . . . . .

$6,150.00

Limitation. Divide the total

1. The limitation shown on the last line of the Line 3

$512.50

by 12

Limitation Chart and Worksheet in the Instructions for

Form 8889, Health Savings Accounts (HSAs), or

Chris would include $5,637.50 ($6,150.00 – $512.50) in

his gross income on his 2011 tax return. Also, a 10%

2. The maximum annual HSA contribution based on

additional tax applies to this amount.

your HDHP coverage (self-only or family) on the first

day of the last month of your tax year.

Example 2. Erika, age 39, has self-only HDHP cover-

age on January 1, 2010. Erika changes to family HDHP

If you had family HDHP coverage on the first day

coverage on November 1, 2010. Because Erika has family

of the last month of your tax year, your contribu-

TIP

HDHP coverage on December 1, 2010, she contributes

tion limit for 2010 is $6,150 even if you changed

$6,150 for 2010.

coverage during the year.

Erika fails to be an eligible individual in March 2011.

Because she did not remain an eligible individual during

Last-month rule. Under the last-month rule, if you are an

the testing period (December 1, 2010, through December

eligible individual on the first day of the last month of your

31, 2011), she must include in income the contribution

tax year (December 1 for most taxpayers), you are consid-

made that would not have been made except for the

ered an eligible individual for the entire year. You are

last-month rule. Erika uses the worksheet for line 3 in the

treated as having the same HDHP coverage for the entire

Form 8889 instructions to determine this amount.

year as you had on the first day of that last month.

Testing period. If contributions were made to your

January . . . . . . . . . . . . . . .

$3,050.00

HSA based on you being an eligible individual for the entire

February . . . . . . . . . . . . . .

$3,050.00

year under the last-month rule, you must remain an eligible

March . . . . . . . . . . . . . . . .

$3,050.00

individual during the testing period. For the last-month rule,

April . . . . . . . . . . . . . . . . .

$3,050.00

the testing period begins with the last month of your tax

May . . . . . . . . . . . . . . . . . .

$3,050.00

year and ends on the last day of the 12th month following

June . . . . . . . . . . . . . . . . .

$3,050.00

that month. For example, December 1, 2010, through

July . . . . . . . . . . . . . . . . . .

$3,050.00

December 31, 2011.

August . . . . . . . . . . . . . . .

$3,050.00

If you fail to remain an eligible individual during the

September . . . . . . . . . . . .

$3,050.00

testing period, other than because of death or becoming

October . . . . . . . . . . . . . . .

$3,050.00

disabled, you will have to include in income the total contri-

November . . . . . . . . . . . . .

$6,150.00

butions made to your HSA that would not have been made

December . . . . . . . . . . . . .

$6,150.00

except for the last-month rule. You include this amount in

Total for all months . . . . .

$42,800.00

your income in the year in which you fail to be an eligible

Limitation. Divide the total

$3,566.67

individual. This amount is also subject to a 10% additional

by 12

tax. The income and additional tax are shown on Form

8889, Part III.

Erika would include $2,583.33 ($6,150 – $3,566.67) in her

gross income on her 2011 tax return. Also, a 10% addi-

Example 1. Chris, age 53, becomes an eligible individ-

tional tax applies to this amount.

ual on December 1, 2010. He has family HDHP coverage

on that date. Under the last-month rule, he contributes

Additional contribution. For 2010, if you are an eligible

$6,150 to his HSA.

individual who is age 55 or older, your contribution limit is

Publication 969 (2010)

Page 5

Publication 969 - Health Savings Accounts And Other Tax-Favored Health Plans - 2010 Page 5

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