If you enroll in a High Deductible Health Plan (HDHP) mid-year, the IRS “Last Month Rule” (outlined in IRS Publication 969) may allow you to contribute the full annual HSA contribution limit for your coverage type, as long as you are enrolled in an HDHP on the first day of the last month of your tax year (December 1 for most taxpayers).
However, to avoid penalties, you must remain HSA-eligible throughout the “testing period,” which begins on December 1 and ends on December 31st the following year. If you fail to maintain eligibility during this period, the extra contributions may become taxable, and you could face additional penalties.
For more information, refer to IRS Publication 969 or consult a tax professional for guidance on your specific situation.
Source: "Publication 969 (2018), Health Savings Accounts and Other Tax-Favored Health Plans.”
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