Twelfths — HSA eligibility, limits and substantiation

Health savings accounts look like a savings product and behave like a tax instrument. Eligibility is tested on the first day of every month, so the annual limit is a sum of twelfths at whichever tier applied in each month, and the last-month rule can lift it to the full annual figure in exchange for a testing period that claws the difference back a year later.

Eligible

Yes

6 qualifying months

Contribution limit

$9,750

via last-month rule

Contributed

$6,200

64% of limit

Remaining room

$3,550

available

Catch-up

$1,000

age 57, 55+

Excise exposure

6% per year on excess

Monthly coverage

Click a month to cycle it between not eligible, self-only and family. Eligibility is tested on the first day of each month, so the limit is the sum of twelfths at each month's own tier, not the annual figure for whatever tier the member holds in December.

Limit derivation

Statutory annual, family tier	$8,750.00
Catch-up (age 57)	$1,000.00
Prorated at 6/12 months	$3,787.50
Applied limit	$9,750.00

Last-month rule applied

Eligible on 1 December means the member may be treated as eligible for the whole year, lifting the limit from $3,787.50 to $9,750.00. The cost is a testing period: they must remain HSA-eligible through 2027-12-31 or the difference becomes taxable income plus a 10% additional tax.

Plan & member facts

○ Medicare enrolled ○ Other health coverage ○ Spouse's general-purpose FSA ○ Claimed as dependent ○ Testing period failed ○ Pays non-preventive pre-deductible

Eligible to contribute

Plan meets the $3,400 minimum deductible and stays under the $17,000 out-of-pocket ceiling for family coverage, with no disqualifying coverage on file.

Card substantiation

DENIEDHalcyon Day Spa $195.00

TX-5509 · MCC 7230 — Beauty and barber shops · presumption unqualified

General health or wellness purchase. Expenses merely beneficial to general health are not medical care.

DOCS REQUESTEDSelby Orthopedic Group $780.00

TX-5508 · MCC 8011 — Doctors and physicians · presumption qualified

No auto-substantiation path. Needs an itemised receipt showing provider, date of service, patient and description.

AUTO-APPROVEDCascade Vision Center $289.00

TX-5507 · MCC 8043 — Opticians and eyewear · presumption qualified

Matches a previously substantiated recurring expense. Same merchant, same amount, same provider as an expense already documented.

DENIEDGrovemart Grocery $143.82

TX-5506 · MCC 5411 — Grocery stores · presumption unqualified

General health or wellness purchase. Expenses merely beneficial to general health are not medical care.

DOCS REQUESTEDIronhold Fitness $89.00

TX-5505 · MCC 7997 — Health clubs and gyms · presumption conditional

Qualifies only with a letter of medical necessity. Dual-purpose expense: qualified only when prescribed for a specific diagnosed condition.

DENIEDAurelia Aesthetics $1,250.00

TX-5504 · MCC 8011 — Doctors and physicians · presumption qualified

Cosmetic procedure. Cosmetic surgery is excluded from 213(d) unless it corrects a deformity from congenital abnormality, injury or disfiguring disease.

AUTO-APPROVEDNorthline Family Practice $35.00

TX-5503 · MCC 8011 — Doctors and physicians · presumption qualified

Amount matches a known plan copay. Copay matching is an IRS-recognised auto-substantiation method.

AUTO-APPROVEDMeridian Pharmacy #418 $28.47

TX-5502 · MCC 5912 — Drug stores and pharmacies · presumption mixed

IIAS-certified merchant with item-level substantiation. The merchant separated eligible items at the register under an inventory information approval system, so the swipe is already substantiated.

DOCS REQUESTEDRidgeway Family Dentistry $342.00

TX-5501 · MCC 8021 — Dentists and orthodontists · presumption qualified

No auto-substantiation path. Needs an itemised receipt showing provider, date of service, patient and description.

A denial always beats an approval shortcut. An IIAS-certified terminal can still ring up a cosmetic procedure, so the rules are evaluated together and resolved by precedence instead of returning on the first match.