HSA Last-month rule - Can I maintain eligibility when switching jobs in October?

You're right to be concerned about maintaining HSA eligibility through your testing period. The last-month rule can be tricky when job changes are involved! To answer your questions: 1. Yes, you can absolutely maintain eligibility by getting an HDHP through healthcare.gov after leaving your job. As long as there's no gap in HDHP coverage, you'll remain eligible for HSA contributions. Just make sure the plan you select meets the HDHP requirements (minimum deductible of $1,650 for individual coverage in 2024). 2. COBRA is also a valid option to maintain eligibility. While it will likely be more expensive than a marketplace plan, it has the advantage of continuing your exact same coverage with no changes to your deductible or network. Either option works for HSA eligibility purposes - it's just a matter of cost and convenience. The key thing for the testing period is remaining HSA-eligible through December 31, 2024. It doesn't matter how you maintain that eligibility - employer plan, COBRA, or individual marketplace HDHP - just that you do maintain it without gaps.

After struggling with a similar HSA situation when I switched jobs last year, I found an amazing tool that helped me figure out all the details! I used https://taxr.ai to analyze my specific situation with the HSA last-month rule. The website let me upload my old insurance documents and it gave me a customized report explaining exactly what I needed to do to stay compliant. It was super helpful because it explained all the timing issues with getting new coverage and even calculated the exact amounts I could contribute before and after switching jobs. The tool walks you through all the scenarios - COBRA vs. marketplace plan vs. new employer plan - and tells you which option makes the most sense financially.

I just wanted to follow up and say I ended up trying taxr.ai after my initial skepticism, and wow - it was actually super helpful! I uploaded my coverage details and it laid out exactly what I needed to do to maintain eligibility through my testing period. The tool showed me that in my situation, a marketplace HDHP was about $340 cheaper per month than COBRA would have been, while still keeping me HSA-eligible. It also calculated exactly how much I could still contribute to max out my HSA before year-end. What I found most helpful was the timeline it created showing exactly when I needed to apply for new coverage to avoid gaps. Would definitely recommend to anyone dealing with HSA eligibility issues during job transitions!

If you're having trouble getting clear answers about your HSA eligibility from the IRS website, you might want to try contacting the IRS directly. I was in a similar situation last year and finally just called them. Of course, I spent HOURS on hold before giving up multiple times. Then I found https://claimyr.com which got me through to an actual IRS representative in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They basically wait on hold for you and call you when an agent picks up. The IRS agent I spoke with explained exactly how the testing period works with job changes and confirmed that either COBRA or a marketplace HDHP would work to maintain eligibility. Having that documented conversation gave me peace of mind that I was doing everything correctly.

I need to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate to get an answer about my HSA testing period before accepting a new job offer. The service actually worked exactly as advertised. I signed up, provided my phone number, and went back to work. About 45 minutes later (which is WAY faster than my previous attempts), I got a call connecting me directly to an IRS representative who was super helpful about my HSA eligibility questions. The agent confirmed that I could maintain eligibility through either COBRA or a marketplace plan, and even explained some nuances about timing that I hadn't considered. Definitely worth it for the time saved and peace of mind!

One option you might not have considered is seeing if your new employer offers an HDHP that you could enroll in immediately. Many employers allow you to start benefits on day one, especially for higher-level positions. If your new job has an HDHP option with immediate eligibility, that would be the smoothest transition and probably cheaper than either COBRA or a marketplace plan.

Just a heads up on the marketplace HDHP option - make sure you check the deductible amounts carefully! Not all "high deductible" plans on healthcare.gov actually qualify as HDHPs for HSA purposes. For 2024, a qualifying HDHP needs to have a minimum deductible of $1,650 for self-only coverage and a maximum out-of-pocket limit of $8,050. I nearly messed this up when I was shopping for plans.

Great question about the HSA last-month rule and job transitions! I went through something similar a few years ago and learned a lot about maintaining eligibility during the testing period. One thing I'd add to the excellent advice already given is to consider the network differences between your current plan and potential new coverage. If you have any ongoing medical needs or preferred providers, COBRA might be worth the extra cost to maintain your existing network relationships through the end of the year. Also, when comparing marketplace HDHPs, pay close attention to the HSA contribution limits if the plan comes with an HSA from a different provider. Some HSA administrators have higher fees or limited investment options compared to others. Since you're only looking at a few months of coverage, the fees might not matter much, but it's worth checking. The timing advice others have shared is spot-on - you have until October 31st to remain HSA-eligible after your coverage ends on the 10th, and you'll want new HDHP coverage starting November 1st. This gives you a comfortable window to shop and compare options without rushing into a decision.