Prorata calcs for someone switching coverage

[dmwe]

When someone over age 55 switches from Family to Single coverage May 1st, does the annual limit you use to calculate the prorata annual contribution limit include the Catchup $1000? So $8200 for 4 months, then $4600 for 8 months. Or do you use the annual limit of $7200 or $3600 for the prorata calculations, and then add the $1000 to that?

Thanks

[Brian Gilmore]

It's the former.  The IRS Form 8889 Instructions have a pretty easy worksheet (copied below) where you plug in the applicable amounts: https://www.irs.gov/pub/irs-pdf/i8889.pdf

Your situation should come out to $5,800.  $8,200 x 4 = $32,800.  $4,600 x 8 = $36,800.  $32,800 + $36,800 = $69,600 / 12 = $5,800.

Note that things get a little more complicated with the catch-up when both spouses are HSA-eligible and at least one is enrolled in family HDHP coverage.  In that case, the special spousal combined limit applies, and each spouse may be eligible to contribute a catch-up to their own HSA. Here's a couple posts walking through that issue:

• https://www.theabdteam.com/blog/hsa-catch-up-contributions/
• https://www.theabdteam.com/blog/special-hsa-contribution-limit-for-spouses/
• 2021 ABD Go All the Way With HSA Guide (slide 17)