Common use of HSAs Established Mid-Year Clause in Contracts

HSAs Established Mid-Year. If you are an eligible individual during the last month of the taxable year, you will be treated as (i) as having been an eligible individual during each of the months in such taxable year, and (ii) as having been enrolled, during each of the months you are treated as an eligible individual solely by reason of item (i) above, in the same high deductible health plan in which you are enrolled for the last month of such taxable year. Under these circumstances, and subject to the requirement that you remain an eligible individual during the testing period, you may contribute the maximum amount to your HSA as though you were an eligible individual throughout the entire taxable year. The “testing period” means the period beginning with the last month of the taxable year referred to above, and ending on the last day of the twelfth (12th) month following such month. If at any time during the testing period you cease to be an eligible individual, then your gross income in the taxable year in which you cease to be an eligible individual will be increased by the amount of all contributions to your HSA which could not have been made but for the rule above in this paragraph d., and you may be required to pay a penalty tax equal to twenty percent (20%) of the amount of such increase. These amounts will not be included in gross income or subject to the twenty percent (20%) penalty tax if you cease to be an eligible individual because of death or because you become disabled (within the meaning of Section 72(m) of the Code).

HSAs Established Mid-Year. If you are an eligible individual during the last month of the taxable year, you will be treated as (i) as having been an eligible individual during each of the months in such taxable year, and (ii) as having been enrolled, during each of the months you are treated as an eligible individual solely by reason of item (i) above, in the same high deductible health plan HDHP in which you are enrolled for the last month of such taxable year. Under these circumstances, and subject to the requirement that you remain an eligible individual during the testing period, you may contribute the maximum amount to your HSA as though you were an eligible individual throughout the entire taxable year. The “"testing period” " means the period beginning with the last month of the taxable year referred to above, above and ending on the last day of the twelfth (12th) month following such month. If at any time during the testing period you cease to be an eligible individual, then your gross income in the taxable year in which you cease to be an eligible individual will be increased by the amount of all contributions to your HSA which could not have been made but for the rule above in this paragraph d., and you may be required to pay a penalty tax equal to twenty percent (20%) of the amount of such increase. These amounts will not be included in gross income or subject to the twenty percent (20%) penalty tax if you cease to be an eligible individual because of death or because you become disabled (within the meaning of Section 72(m) of the Code).

HSAs Established Mid-Year. If you are an eligible individual during the last month of the taxable year, you will be treated as (i) as having been an eligible individual during each of the months in such taxable year, and (ii) as having been enrolled, during each of the months you are treated as an eligible individual solely by reason of item (i) above, in the same high deductible health plan in which you are enrolled for the last month of such taxable year. Under these circumstances, and subject to the requirement that you remain an eligible individual during the testing period, you may contribute the maximum amount to your HSA as though you were an eligible individual throughout the entire taxable year. The “testing period” means the period beginning with the last month of the taxable year referred to above, and ending on the last day of the twelfth (12th) month following such month. If at any time during the testing period you cease to be an eligible individual, then your gross income in the taxable year in which you cease to be an eligible individual will be increased by the amount of all contributions to your HSA which could not have been made but for the rule above in this paragraph d., and you may will be required to pay a penalty tax equal to twenty ten percent (2010%) of the amount of such increase. These amounts will not be included in gross income or subject to the twenty ten percent (2010%) penalty tax if you cease to be an eligible individual because of death or because you become disabled (within the meaning of Section 72(m) of the Code).