You can complete all the paperwork prior to the effective date of your HDHP coverage. However, your account is not officially “established” until your HDHP coverage begins and a deposit is made into the account.
It is generally the goal to have funds in the HSA on the day that the HDHP is effective. This can be a challenge if January 1 is a weekend/bank holiday. If the HDHP is effective January 1, you are not permitted to make an HSA deposit in the prior calendar year. Here’s why. The custodial bank generates IRS reporting based on a calendar year. A deposit made in the prior calendar year will generate a Form 5498-SA showing that deposits had been made attributable to that calendar year. The issue is that the individual was not technically HSA-eligible until the next calendar year. This may cause a red flag with the IRS. We want to avoid that; therefore if your HDHP is effective January 1, the first date available for a deposit into the health savings accounts will be no earlier than January 2nd. Please contact FlexBank’s HSA team to discuss the timing when using our online HSA depositing system.