On Monday, March 5th, 2018, the IRS announced an important change to the maximum health savings account (‘HSA’) contribution amount for families. The new maximum for 2018 is $6,850 per family, down slightly from the previously announced maximum of $6,900.
The individual HSA contribution limit for 2018 will stay the same at $3,450.
Other health savings account limits, including the maximum out of pocket limits for HSA-qualified plans, the minimum deductible for an HSA-qualified high deductible health plan (HDHP), and the post-age 55 contribution catch-up limit, were also unchanged.
Per the IRS announcement, a ‘high deductible health plan’ is defined as “a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage and $13,300 for families.”
Health savings account limits and changes are usually announced in May for the following tax year and typically remain unchanged throughout the tax year. However, this HSA contribution change is a result of the new tax reform bill that was passed on December 19th, 2017. One of the tax reform changes impacted the way that inflation-related increases are calculated from the consumer price index (CPI) to a new factor called ‘chained CPI’.
While this new chained CPI method of calculating inflation-related increases also applies to flexible spending accounts (FSAs), there does not appear to be any immediate impact on the announced limits for these plans in 2018.
If you are a PlanSource customer, we are modifying the appropriate systems to reflect this change. You will be receiving additional communication with next steps to update systems and employee elections.
You can see the full March 2018 Internal Revenue Bulletin for more information.
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