HSA Tip: The “Last Month Rule” Could Let You Max Out Contributions—Even If You Enrolled Late

By Dan Rivet, CFP®

If you started a High-Deductible Health Plan (HDHP) late in the year but still want to take advantage of Health Savings Account (HSA) benefits, then you’re not out of luck. Thanks to an IRS provision called the Last Month Rule, you may still be eligible to contribute the full annual amount to your HSA—even if you weren’t enrolled all year.

Here’s what you need to know:

What Is the “Last Month Rule”?

The Last Month Rule allows you to contribute the maximum HSA limit for the year as long as you are HSA-eligible on December 1st of that year.

To be eligible, you must:

• Be covered by a qualified HDHP

• Have no other disqualifying coverage

• Not be enrolled in Medicare

• Not be claimed as a dependent on someone else’s tax return

If you meet these criteria on December 1st, then the IRS treats you as though you were eligible for the entire year—even if you only started your plan in November or December.

2025 HSA Contribution Limits

Coverage Type	Under Age 55	Age 55+ (includes catch-up)
Self-only coverage	$4,300	$5,300
Family coverage	$8,550	$9,550

If you’re HSA-eligible on December 1, 2025, you can contribute the full amount above, regardless of when your HDHP coverage began that year.

But Be Careful: The Testing Period

The catch is the testing period. If you take advantage of the Last Month Rule, you must remain HSA-eligible (i.e., stay covered by a qualified HDHP) through December 31st of the following year.

If you lose eligibility before then:

• The portion of your contribution based on ineligible months becomes taxable income

• You’ll owe a 10% penalty on that amount

This rule is meant to prevent people from briefly enrolling in an HDHP just to front-load HSA contributions.

Why This Matters for Planning

As advisors at The Foundry, we often recommend maximizing HSA contributions when possible. HSAs are triple tax-advantaged:

1. Contributions are tax-deductible (or pre-tax via payroll)

2. Growth is tax-free

3. Withdrawals for qualified medical expenses are tax-free

If you just got on an HDHP—or are planning to switch—don't assume it's "too late" to benefit from an HSA. The Last Month Rule could open the door to thousands in extra contributions and tax savings this year. Contributions for 2025 can be made until April 15, 2026.

Want Help Making the Most of Your HSA?

If you’re unsure whether the Last Month Rule applies to your situation—or want help deciding how much to contribute, we’d be happy to walk through the numbers with you.