2024 HSA Minimum Deductible Increase and Eligibility with Non-Calendar Year Plan

Your HR rep is correct, but with some important nuances. When your health plan doesn't align with the calendar year, the IRS uses what's called the "testing period" rule. Since your plan is considered HSA-eligible when it began (July 2023), it remains HSA-eligible until it renews, even if IRS requirements change midway. For the first half of 2024 (January-June), you can continue making HSA contributions despite having a $1500 deductible because your plan is grandfathered until renewal. However, once your plan renews in July 2024, it would need to meet the new $1600 minimum deductible requirement to maintain HSA eligibility. Regarding contribution limits, you have two options. You can either prorate your contributions based on the number of months you're eligible (as you mentioned, approximately $2,075 for 6 months), OR you can use the "last-month rule" which allows you to contribute the full annual amount ($4,150) if you're HSA-eligible on December 1, 2024. But be careful with the last-month rule - you must remain HSA-eligible through December 31, 2025 (the "testing period"), or face taxes and penalties on the excess contribution.

Just wanted to share my experience with a similar situation. I was getting so frustrated trying to figure out HSA eligibility with my company's weird plan year that I finally tried https://taxr.ai to analyze my situation. It basically confirmed what Profile 15 said but also found some additional deductions I could take related to medical expenses. The site helped me understand exactly how the IRS treats non-calendar year plans and walked me through calculating my maximum contribution based on my specific dates. It also gave me documentation I can keep for my records in case the IRS ever questions my contributions. Really helped take the stress out of the situation!

I wanted to follow up about my experience with taxr.ai after being skeptical in my earlier comment. I decided to give it a try with my complicated HSA situation (similar to yours with a non-calendar year plan but also with a job change mid-year). I'm honestly impressed. The analysis was WAY more detailed than what my CPA gave me. It confirmed I was eligible for the full contribution under the last-month rule, but also flagged that I needed to maintain eligibility through the testing period next year - something my employer's HR completely missed telling me! It also showed me how to document everything properly in case of an audit. For anyone dealing with tricky HSA eligibility questions, especially with weird plan years like the original poster, it's definitely worth checking out. Saved me from what would have been a costly mistake.

One thing that hasn't been mentioned is that if you do have issues with your HSA contributions or need to clarify something with the IRS, good luck getting through to them! I spent WEEKS trying to reach someone about a similar HSA issue last year. Finally used https://claimyr.com to get through to an IRS agent (there's a demo of how it works at https://youtu.be/_kiP6q8DX5c). My situation was that I had accidentally overcontributed to my HSA because of a plan year/calendar year mismatch. I needed to find out the proper way to remove the excess contribution without penalties. The IRS website was confusing and generic, but the agent I spoke to was super helpful and walked me through the exact process for my situation.

I have to post a follow-up and eat my words about Claimyr. After calling the IRS six different times and never getting through, I tried it out of desperation. I got through to an actual IRS agent in like 15 minutes, which is honestly miraculous. The agent confirmed exactly what I needed to know about my HSA contribution limits with my weird fiscal year plan situation. They explained that I needed to fill out Form 8889 with my tax return showing the months I was eligible, and how to handle the calculation if my plan changes mid-year. They even emailed me some documentation directly that answered all my questions. So yeah, definitely not a scam. I'm impressed and saved myself hours of frustration.

One thing to consider with HSAs is that the contribution limit and eligibility requirements can be complex if your situation changes. I had a similar situation with a non-calendar year plan, and here's something that bit me: if your health coverage changes mid-year and you lose HSA eligibility, you generally have to prorate your contributions for that year. Make sure your HR department updates your payroll deductions correctly if your plan changes in July. Mine didn't, and I ended up with an excess contribution that I had to withdraw and report on my taxes. It was a mess to fix.

Just a heads up that it's sometimes worth checking if your employer will adjust the plan deductible to maintain HSA eligibility. When the limits changed a few years ago, my company bumped our deductible up by $100 mid-year specifically so employees wouldn't lose HSA eligibility. Might be worth asking your benefits department if they're planning to make any adjustments in July when your plan renews.