HSA eligibility if I switch insurance mid year

[JK]

I am currently a senior resident and looking to evaluate 2018 open enrollment options. I've used a HDHP for a few years and maxed HSA contribution but this year is a slightly different situation. Am I able to start 2018 in a HDHP and contribute max amount to HSA during the first half and then in July/August when I become an attending be able to switch to a more comprehensive health plan? I ask, because normally HDHP is fine as we are both healthy but my wife and I may start trying for a child this year with possible anticipated delivery at the end of 2018. Therefore it would be great to make the HSA contribution for the year up front and then still be able to switch to more comprehensive health plan when my wife might need more coverage.  However, from my brief research, it seems that I can only contribute a percentage to my HSA based on the number of months I am eligible. So if I am only on the HDHP for 6 months, then I can only contribute 50% of the max HSA contribution for 2018. Is this correct? And what happens if you do contribute everything up front and then make a change...how do you go back and fix the mistake of overcontributing?

[spiritrider]

You are correct. Your maximum HSA contribution limit is prorated by the number of months you are an eligible individual on the first of that month. Eligible individual 6 months = maximum contribution * 6 / 12 = 50% of applicable contribution limit.

There is an exception to the prorata rule for partial year eligibility, when the contributions come at the end of the year and you are an eligible individual on 12/1. This is called the "last month rule", but since you do not qualify I will not describe it in detail.

If you contributed the full applicable contribution, then you have a 50% excess contribution. That excess contribution and earnings must be returned by your tax filing deadline including extensions.

If you made pre-tax contributions by payroll deduction, the excess contributions are reported as taxable income. If you made direct contributions to the HSA account, a deduction for the excess amount is not claimed. In either case the earnings on the excess contribution are reported as taxable income.