The full-contribution rule allows a full year's worth of health savings account (HSA) contributions for someone who is HSA eligible for only a portion of the year. Under the full-contribution rule, an individual who becomes covered under a high-deductible health plan (HDHP) in a month other than January, and who is an HSA-eligible individual on December 1 of that year (i.e., has HDHP coverage and no disqualifying coverage on December 1), is treated as having been an eligible individual during every month of the year. As such, the individual can make contributions (or have contributions made on his or her behalf) for the months during the year before the individual enrolled in the HDHP.
Although the full-contribution rule provides that individuals who are HSA eligible on December 1 of the year are treated as eligible individuals on January 1 for purposes of determining the contribution amount for the year, the full-contribution rule has no effect upon an HSA's establishment date. The full-contribution rule applies without regard to whether the individual was an eligible individual for the entire year, had HDHP coverage for the entire year, or had disqualifying non-HDHP coverage for part of the year. An individual who makes contributions in reliance upon the full-contribution rule must remain HSA eligible during a 13-month testing period to avoid adverse tax consequences.
The full-contribution rule is also referred to by some as the “last-month rule” or the “no-proration rule.”