February 6, 2024
ONLY DRAFT
AND OMB USE
TREASURY/IRS
If both spouses are 55 or older and not enrolled in Med-
icare, each spouse’s contribution limit is increased by the
additional contribution. If both spouses meet the age re-
quirement, the total contributions under family coverage
can’t be more than $9,750. Each spouse must make the
additional contribution to its own HSA.
Example. For 2023, you and your spouse are both eli-
gible individuals. You each have family coverage under
separate HDHPs. You are 58 years old and your spouse is
53. You and your spouse can split the family contribution
limit ($7,750) equally or you can agree on a different divi-
sion. If you split it equally, you can contribute $4,875 to an
HSA (one-half the maximum contribution for family cover-
age ($3,875) + $1,000 additional contribution) and your
spouse can contribute $3,875 to an HSA.
Employer contributions. You must reduce the
amount you, or any other person, can contribute to your
HSA by the amount of any contributions made by your em-
ployer that are excludable from your income. This includes
amounts contributed to your account by your employer
through a cafeteria plan.
Enrolled in Medicare. Beginning with the first month
you are enrolled in Medicare, your contribution limit is
zero. This rule applies to periods of retroactive Medicare
coverage. So, if you delayed applying for Medicare and
later your enrollment is backdated, any contributions to
your HSA made during the period of retroactive coverage
are considered excess. See Excess contributions, later.
Example. You turned age 65 in July 2023 and enrol-
led in Medicare. You had an HDHP with self-only coverage
and are eligible for an additional contribution of $1,000.
Your contribution limit is $2,425 ($4,850 × 6 ÷ 12).
Qualified HSA funding distribution. A qualified HSA
funding distribution may be made from your traditional IRA
or Roth IRA to your HSA. This distribution can’t be made
from an ongoing SEP IRA or SIMPLE IRA. For this pur-
pose, a SEP IRA or SIMPLE IRA is ongoing if an employer
contribution is made for the plan year ending with or within
the tax year in which the distribution would be made.
The maximum qualified HSA funding distribution de-
pends on the HDHP coverage (self-only or family) you
have on the first day of the month in which the contribution
is made and your age as of the end of the tax year. The
distribution must be made directly by the trustee of the
IRA to the trustee of the HSA. The distribution isn’t inclu-
ded in your income, isn’t deductible, and reduces the
amount that can be contributed to your HSA. The qualified
HSA funding distribution is shown on Form 8889 for the
year in which the distribution is made.
You can generally make only one qualified HSA funding
distribution during your lifetime. However, if you make a
distribution during a month when you have self-only HDHP
coverage, you can make another qualified HSA funding
distribution in a later month in that tax year if you change
to family HDHP coverage. The total qualified HSA funding
distribution can’t be more than the contribution limit for
family HDHP coverage plus any additional contribution to
which you are entitled.
Example. In 2023, you are an eligible individual, age
57, with self-only HDHP coverage. You can make a quali-
fied HSA funding distribution of $4,850 ($3,850 plus
$1,000 additional contribution).
Funding distribution—testing period. You must re-
main an eligible individual during the testing period. For a
qualified HSA funding distribution, the testing period be-
gins with the month in which the qualified HSA funding
distribution is contributed and ends on the last day of the
12th month following that month. For example, if a quali-
fied HSA funding distribution is contributed to your HSA
on August 10, 2023, your testing period begins in August
2023, and ends on August 31, 2024.
If you fail to remain an eligible individual during the test-
ing period, for reasons other than death or becoming disa-
bled, you will have to include in income the qualified HSA
funding distribution. You include this amount in income in
the year in which you fail to be an eligible individual. This
amount is also subject to a 10% additional tax. The in-
come and the additional tax are calculated on Form 8889,
Part III.
Each qualified HSA funding distribution allowed has its
own testing period. For example, you are an eligible indi-
vidual, age 45, with self-only HDHP coverage. On June
18, 2023, you make a qualified HSA funding distribution.
On July 27, 2023, you enroll in family HDHP coverage and
on August 17, 2023, you make a qualified HSA funding
distribution. Your testing period for the first distribution be-
gins in June 2023 and ends on June 30, 2024. Your test-
ing period for the second distribution begins in August
2023 and ends on August 31, 2024.
The testing period rule that applies under the
last-month rule (discussed earlier) doesn’t apply to
amounts contributed to an HSA through a qualified HSA
funding distribution. If you remain an eligible individual
during the entire funding distribution testing period, then
no amount of that distribution is included in income and
won’t be subject to the additional tax for failing to meet the
last-month rule testing period.
Rollovers
A rollover contribution isn’t included in your income, isn’t
deductible, and doesn’t reduce your contribution limit.
Archer MSAs and other HSAs. You can roll over
amounts from Archer MSAs and other HSAs into an HSA.
You don’t have to be an eligible individual to make a roll-
over contribution from your existing HSA to a new HSA.
Rollover contributions don’t need to be in cash. Rollovers
aren’t subject to the annual contribution limits.
You must roll over the amount within 60 days after the
date of receipt. You can make only one rollover contribu-
tion to an HSA during a 1-year period.
Note. If you instruct the trustee of your HSA to transfer
funds directly to the trustee of another of your HSAs, the
transfer isn’t considered a rollover. There is no limit on the
number of these transfers. Don’t include the amount trans-
ferred in income, deduct it as a contribution, or include it
as a distribution on Form 8889.
Publication 969 (2023) 7