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What is last month rule in HSA. I am employee
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The "last month rule" for an HSA allows an employee who was eligible for an HSA on December 1, 2016, to contribute to his/her HSA as if he/she had been in the HSA all year.
Normally, the contribution limit would be pro-rated based on the number of months the taxpayer was in the HSA, but with the last month rule, the limit is raised to be the annual limit as if the taxpayer had been in the HSA all year.
If you started the HSA during 2016 and were in the HSA by December 1, 2016, then you can answer "yes" to the question of "Did [name] make a contribution to an HSA based on the last month rule?" in order to get the contribution limit raised to the annual maximum.
On the other hand, if you were in your HSA all last year, then you would answer "no", because invoking the last month rule wouldn't be necessary.
Normally, the contribution limit would be pro-rated based on the number of months the taxpayer was in the HSA, but with the last month rule, the limit is raised to be the annual limit as if the taxpayer had been in the HSA all year.
If you started the HSA during 2016 and were in the HSA by December 1, 2016, then you can answer "yes" to the question of "Did [name] make a contribution to an HSA based on the last month rule?" in order to get the contribution limit raised to the annual maximum.
On the other hand, if you were in your HSA all last year, then you would answer "no", because invoking the last month rule wouldn't be necessary.
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