Yes. Amendments to the laws governing HSAs established new contribution limits and also allow individuals who become covered under a high-deductible plan in a month other than January to make the full HSA contribution for the year.

Under the new provisions, an individual who is an eligible individual during the last month of a taxable year is treated as having been an eligible individual during every month during the taxable year for purposes of computing the amount that may be contributed to the HSA for the year. Thus, such an individual is allowed to make contributions for months before the individual was enrolled in an HDHP.

However, in order for these pre-HDHP contributions to remain nontaxable, the individual must remain eligible for the HSA during the "testing period." The testing period is the period beginning with the last month of the taxable year in which contributions are first made and ending on the last day of the 12th month following such month. If the individual does not remain eligible for the entire testing period, contributions attributable to periods before eligibility began are fully taxable with an additional 10-percent penalty.

For example, if an individual with individual HDHP coverage starts an HSA in July 2007, the normal contribution limit would be 6/12 of $2,850, or $1,425. However, the 2006 amendments to the HSA law allow this individual to contribute up to the full $2,850 for 2007. If the individual contributes more than $1,425, he or she must remain in the HDHP through 2008. If the individual does not remain in the HDHP through 2008, he or she will be taxed on the 2007 contribution that is more than $1,425, plus a 10-percent penalty.

Source: Code Sec. 223(b)(8)(A), as added by the Tax Relief and Health Care Act of 2006 (P.L. 109-432, 120 Stat 2922).