IRS Reverses HSA Family Contribution Limits – Again!

In March, due to the new inflation-adjustment calculations required under the Tax Cuts and Jobs Bill Act, the IRS announced in revenue ruling 2018-27 that the previously released (in May 2017) $6,900 family contribution limit would be reduced to $6,850. Since excess contributions are subject to a 6% excise tax, many employers and individuals who front-loaded their HSA contributions in January were now looking at a penalty for overfunding their HSA for 2018, as well as income tax due on the excess. The IRS received enough complaints from stakeholders asserting that implementing the $50 reduction to the limitation would impose numerous unanticipated administrative and financial burdens that they have actually reversed their decision and will go back to the $6,900 family contribution limit for 2018. The revised inflation-adjustment calculation established under the Tax bill has been put on hold until 2019.

IRS Adjusts HSA Limits for 2018

The IRS has released the inflation-adjusted contribution and related amounts for health savings accounts (HSAs) and HSA-compatible high-deductible health plans, or HDHPs, for 2018. These limits are tied to changes in the Consumer Price Index by application of the cost-of-living adjustment rules. The limits for 2018 are set forth below.

2018 HSA Limits

Annual HSA Contribution Maximum: $3,450 for single coverage ($50 increase from $3,400)
$6,900 for family coverage ($150 increase from $6,750)
Annual Catch-Up Contribution Maximum: $1,000 (for HSA-eligible individuals age 55 or older) – no change
HDHP Minimum Deductible: $1,350 for single coverage ($50 increase from $1,300)
$2,700 for family coverage ($100 increase from $2,600)
HDHP Out-of-Pocket Maximum: $6,650 for single coverage ($100 increase from $6,550)
$13,300 for family coverage ($200 increase from $13,100)

Not Legal Advice: Nothing in this Alert should be construed as legal advice.