Here is a rule that lets one month of coverage fund a whole year.
If you are HSA-eligible on December 1, the last-month rule lets you contribute the full annual limit for that year. Not one-twelfth. The whole thing.
But it comes with a testing period that can claw the benefit back. Most people learn about the second part too late.
How the rule works
Normally your contribution limit is prorated by the months you were eligible. Eligible for three months, you get three-twelfths of the limit.
The last-month rule overrides that. Eligible on December 1, you may contribute the full year's limit as if you were eligible all twelve months.
For 2026 that is up to $4,400 individual or $8,750 family from a single qualifying month.
The catch: the testing period
To keep the full contribution, you must stay HSA-eligible through the end of the following year. That is the testing period. Roughly thirteen months from the December you used the rule.
Break it, and the extra amount you contributed beyond the prorated limit becomes taxable income, plus a 10% penalty.
The math, both ways
Say you become eligible December 1, 2026, individual coverage.
- ●Prorated limit for one month: about $367
- ●Last-month rule limit: $4,400
- ●Extra you get to contribute: about $4,033
Stay eligible through December 31, 2027, and that $4,033 is all yours, tax-advantaged.
Lose eligibility in mid-2027, say you switch to a non-HDHP plan, and that $4,033 gets added back to your income and hit with a 10% penalty.
When to use it, and when not to
Use it when you are confident you will stay on an HDHP through the next full year. New job with an HDHP, stable situation, plenty of runway.
Skip it when next year is uncertain. If you might leave the HDHP, age into Medicare, or change jobs, the prorated contribution is the safer play.
The one-line version
The last-month rule is a one-month shortcut to a full-year contribution. The price of admission is staying eligible for thirteen months. Only take the deal if you are sure you can hold the position.
*This is educational content, not financial or tax advice. Consult a qualified professional before making decisions about your HSA.*