An individual or family enrolled in a high-deductible health plan (HDHP) effective January 1, 2017, will be eligible to make a full HSA contribution for the year, without any restrictions. An individual or family enrolled in an HDHP in 2017 in a month(s) other than January may make a full HSA contribution for the year, as long as certain conditions are met. According to the 12-month testing period rule, if you do not remain an eligible individual through 2018, any amount you contributed in 2017 that is more than the prorated share of the maximum amount allowed for the year will be considered "income" for tax purposes and subject to a 10 percent tax penalty. The prorated share is determined by the number of months in which you were enrolled in an HDHP during the year. Example of the 12-month testing period rule: An individual enrolls in an HDHP effective December 1, 2017, and is otherwise an eligible individual in that month. The individual is not an eligible individual in any other month in 2017. The individual can make an HSA contribution for 2017 as if he or she had been enrolled in the HDHP for all of 2017 (that is, he/she may contribute the full amount allowed for the year), as long as he/she remains in an HSA-qualified HDHP through December 31, 2018.
If the individual ceases to be an eligible individual (that is, if he/she ceases to be covered under an HDHP) before December 31, 2018, he/she would only be eligible to contribute a prorated portion of the maximum amount allowed for 2017, representing the month(s) the individual was enrolled in the HDHP in 2017. In this example, the individual would be eligible to contribute 1/12, or one month's worth, of the maximum amount allowed.
If the individual contributed more than 1/12 of the maximum amount allowed, he/she would have to pay income taxes plus a 10 percent penalty on the excess amount contributed in 2017.