HSA Testing Period: 13 Months and What Breaks It

The testing period runs December 1 of the contribution year through December 31 of the following year¹. Losing HSA eligibility inside it, other than by death or disability, adds the last-month-rule contributions back to your income.

Only one thing starts it: using the last-month rule. Contributing your prorated limit instead leaves you outside the period, which is the trade the HSA contribution limit calculator sets out.

The exact window

Publication 969 defines the period arithmetically rather than by name: “For the last-month rule, the testing period begins with the last month of your tax year and ends on the last day of the 12th month following that month.”

The last month of a calendar tax year is December. Twelve months after December 2026 is December 2027, and its last day is December 31, 2027.

Contribution year	Period begins	Period ends	Length
2025	December 1, 2025	December 31, 2026	13 months
2026	December 1, 2026	December 31, 2027	13 months
2027	December 1, 2027	December 31, 2028	13 months

Thirteen months, not twelve. The December that qualifies you is inside the window it opens.

What counts as failing it

You fail by ceasing to be an eligible individual for a month inside the period. The test is the same monthly test as everywhere else: qualifying high-deductible coverage on the first of the month, no disqualifying other coverage, no Medicare enrollment, and not claimable as someone else’s dependent.

Employment is not the test. Changing jobs breaks nothing on its own; losing qualifying coverage does. So does taking on other health coverage that Publication 969 does not permit, and so does enrolling in Medicare — including the backdated enrollment described in Medicare and your HSA.

Death and disability are the only excuses Publication 969 names.

What a failure costs

Two things happen, in the year of the failure rather than the year of the contribution.

First, Publication 969: “you will have to include in income the total contributions made to your HSA that wouldn’t have been made except for the last-month rule. You include this amount in your income in the year in which you fail to be an eligible individual.”

Second: “This amount is also subject to a 10% additional tax.”

The recaptured amount is not your whole contribution. It is only the part the rule made possible — the full annual limit minus the limit your eligible months earned on their own.

Example. A hypothetical taxpayer becomes eligible on October 1, uses the last-month rule and contributes a full self-only annual limit for the year. Three twelfths of that limit were earned by the eligible months. The remaining nine twelfths is the amount at risk, and it stays at risk until the period closes.

For 2026 the annual amounts are $4,400² for self-only coverage and $8,750³ for family coverage. The age-55 catch-up of $1,000⁴ is inside the same calculation, because it is prorated on the same eligible-month count.

The money stays yours

A failed testing period is a tax event, not a forfeiture. Publication 969 handles it as an income inclusion plus an additional tax, not through the excess-contribution rules. The money stays in the HSA and can still be spent on qualified medical expenses.

That distinction matters, because the fix for an excess contribution is a withdrawal before a deadline. No withdrawal undoes a testing-period failure.

How long is the HSA testing period?

Thirteen months. It begins on December 1⁵ of the contribution year and ends on December 31 of the following year.

What happens if I fail the HSA testing period?

The contributions that were only possible under the last-month rule are added to your income for the year you failed, and Publication 969 applies “a 10% additional tax” to that amount.

Does the 10% additional tax apply to my whole contribution?

No. It applies only to the contributions “that wouldn’t have been made except for the last-month rule” — the gap between the full annual limit and your prorated limit.

What ends the testing period without a penalty?

Reaching December 31 of the following year while still an eligible individual. Publication 969 also excuses a failure caused by death or by becoming disabled.

Does losing my job break the testing period?

Not by itself. The period tests HSA eligibility month by month, so it breaks only when the job change leaves you without qualifying high-deductible coverage on the first of a month, or gives you disqualifying coverage.

Is this the same as the testing period for an IRA transfer?

No. A qualified HSA funding distribution has its own testing period, which Publication 969 says “begins 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”.

Can I avoid the testing period entirely?

Yes, by not using the last-month rule. Contributing no more than the limit your eligible months earned leaves nothing to recapture, as the last-month rule sets out.