The IRS Reverses Action on 2018 HSA Maximum Contribution

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The IRS Reverses Action on 2018 HSA Maximum Contribution

April 27, 2018
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The IRS announced on April 26, 2018 that the  contribution limit for Health Savings Accounts (HSAs) linked to family coverage will remain at $6,900 for 2018. This reverses the agency's previous announcement that the limit would be reduced to $6,850. The IRS determined that implementing the $50 reduction would impose numerous unanticipated administrative headaches and financial burdens on taxpayers, employers and other stakeholders.

Employers should communicate this change to impacted employees and make the appropriate adjustments to payroll contributions. 

There is no change to the annual tax deductible limit for individual-only coverage under an HSA ($3,450), and flexible spending accounts (FSAs) for health care, commuter and other benefit limits are not affected.

Background:

A health savings account (HSA) is a tax-advantaged medical savings account available to people who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are tax deductible, or handled as pretax payroll deductions. HSAs help individuals and families pay for their current health care expenses and save for future ones through tax-free withdrawals for qualified medical expenses. HSA and HDHP limits are subject to annual adjustments by the IRS that take effect on January 1 of the following year.

2018 HSA/HDHP Limits

HSA contribution limit (employer + employee): Self-only: $3,450; Family: $6,900

HSA catch-up contributions (age 55 or older): $1,000

HDHP minimum deductibles:  Self-only: $1,350; Family: $2,700

HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums):  Self-only: $6,650; Family: $13,300

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