Mistakes and Lessons Learned with My HSA

I believe I just finished week 3 in the new house. Yippee. So far, so good! Some weird noises and untidy pet owners as neighbors, so only time will tell there.

I'm still getting into a routine, including a financial routine. With opening new accounts and scheduling payments for new expenses - including what is now my 2nd loan servicer before my first payment is even due- I find myself checking accounts or making financial transactions almost every single day so far. I actually enjoy it a little as they are usually little problems easily solved - like setting up a recurring Billpay.

Earlier this year when I was filing my taxes, a note in Credit Karma Tax alerted me to the fact that you could still contribute to your 2019 HSA in 2020. I originally opened an HSA as a monkey-see, monkey-do. A personal finance blogger I follow did it, so I always thought when I had access to one, I'd do it too. Well, that and the other health insurance plans were so pricey! So I figured I'd take my chance of keeping my money with an HSA.

The first issue I had was a payroll issue. Due to some misinformation and trying to contribute extra payments, I missed contributing on my last paycheck in 2019.

The second issue was trying to use the HSA that I opened in 2019 for a medical expense I incurred in 2017.  That's not allowed.

After learning about the ability to contribute to a 2019 by 2020 Tax Day, I corrected both of the above issues before filing my taxes in February 2020.

Just a couple minutes ago, just clicking around in preemptive readiness of the job offer that has not yet happened but is stringing me along, I discovered your HSA annual contribution max is pro-rated to the months you are actually eligible for the HSA, for the most part. There is a last month rule but that wouldn't apply here since I can't predict the future.

Basically, what this means for me is since I was only eligible for an HSA in October, November, December of 2019, my max HSA contribution is pro-rated. Actually, as I type this, I need to double check. I started with Call Center 2 October 7, so I don't know if I was even eligible for an HSA for October since I started after the 1st of the month.  Whether it's 2 or 3 months, I contributed way more than that after I contributed additional payments in 2020. Not sure why Credit Karma Tax didn't catch that?

Ok I just clicked around, and the the language I read on the IRS web-page, says one of the qualifiers for an HSA requires being covered under a high-deductible health plan on the first day of the month. Since my official start date was Oct 7, 2019, I'm guessing I don't qualify to contribute for Oct 2019, even though according to my employer, our benefits started the date of hire. So to avoid any more mistakes, I'm going to calculate my 2019 max contribution based on November and December 2019 only = 3500 / 12 x 2 = $583. I think that's even less than what I had originally.

Grrr!

So for the first time ever, I believe I am going to have to file an amended tax return! I mean I love a good financial mystery, but gee golly! I really need to read the fine print. This is one reason I'm sometimes hesitant to embark on new financial adventures.