If you enroll in the UC Health Savings Plan (HSP) with an effective date of February 1 through December 1, UC’s contribution to the Health Savings Account (HSA) is prorated based on the month your enrollment begins. UC Health Savings Plan members with an effective date from Dec. 2-31 will not receive a UC contribution for that time period; HSA eligibility will begin on January 1 of the following year.
Please see below to learn more about your contributions to the HSA if you enroll in HSP after the beginning of the year.
UC’s contribution is determined on the first month your HSP coverage is effective and will not change during the year. Coverage level as of January 1 determines UC’s contribution for the year.
*UC and employee HSA contributions made through the UC payroll system are attributed to the year in which they are actually made and are subject to the current year’s payroll deadlines. Therefore, a new UC Health Savings Plan member whose coverage is effective in October, November or December may or may not receive the UC contribution for the current year, depending on when the enrollment is completed and processed.
Enrolling during the last quarter of the year
To receive the UC contribution or make contributions via payroll deductions during the last quarter of the calendar year, your UC Health Savings Plan enrollment generally should be processed by the earlier of:
The end of your Period of Initial Eligibility or
The payroll deadline for your last paycheck of the current year
Contact the UCPath Center about your payroll deadline by Submitting An Inquiry:
On the menu bar, select My Inquiries or Submit an Inquiry.
You may also make contributions to your HSA by working directly with HealthEquity. Contributions for the current plan year may be made until your tax-filing deadline, usually April 15 of the following year.
Remember: It is your sole responsibility to ensure your HSA complies with the IRS regulations.
Your contributions to the HSA
The IRS sets a maximum limit for HSA contributions by individuals each year. In general, you must be considered “HSA-eligible” to make contributions to your HSA. Unless you enroll on December 1 and use the IRS last-month rule, you will have to prorate your contributions if you become HSA-eligible after January 1.
The last month rule
Under the last-month rule established by the IRS, if you are an eligible member on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered HSA-eligible for the entire year.
This rule gives you the option to contribute up to the IRS annual maximum if you enrolled in UC Health Savings Plan effective December 1 as long as you remain enrolled through the following tax year. For example, if you enroll in UC Health Savings Plan on December 1, 2022, and remain enrolled through December 31, 2023, you may contribute up to the IRS annual maximum for 2022 in December, and then up to the IRS maximum for 2023 over the course of that year.
Before using the last-month rule, you need to be sure you will keep your HSA-eligibility by remaining in the Health Savings Plan for the next full year as required by the IRS (known as the “testing period”), or you will be subject to taxes and penalties. If you lose eligibility for your HSA during the testing period, for reasons other than death or becoming disabled, you must report any HSA contributions you made during that period as taxable income. This amount is also subject to a 10% additional tax. These rules are complicated, so it’s a good idea to consult your tax consultant.
