bigfooticus said:
What is the definition of HSA eligibility if you have been employed the entire year but just now open an HSA to fund it?
Are you able to contribute the max from after tax to capture some of the tax benefits without penalty? Or will it be have to be prorated?
I can't find a clear answer online.
I have met all the eligibility criteria for 2021.
TIA
I don't have a link for you at the moment but I investigated this a month ago because I moved from a family plan to individual. And yes, it's not super easy to find info on plan switching.
You have two choices when things change:
1) You can choose to prorate, by month. So for example, if your plan started in October, you'd have 3 months left in the year so your limit would be $900 individual, $1,800 family.
2) You can choose to go off whatever you're eligible for in December and therefore make the full annual contribution for that plan; however, there's a 12 month period where you must meet those same conditions that spans into the next year. I forget the technical term for this period, but basically, if you choose to take the full-year option, but then you quit your job in February and take another job with insurance that doesn't qualify for HSA, you're going to get penalized (can't remember what the penalty is).
Also, it's worth noting while I'm discussing technicalities I learned, that while the actual HSA plans are individual, if both you and your spouse have jobs that make you eligible to contribute to HSA, your whole family's max contribution can't exceed the family limit. So if you're on your plan and your wife and kids are on her plan, if you max out your individual contribution, she can only max out the individual on hers even though as far as her work is concerned, they'd let her contribute the full family limit to her plan.
This is one of the many things where tons of people are out of compliance and have no idea and the IRS never catches it until there's an audit.