IRS Lowers 2018 Family Contribution Limit for Health Savings Accounts and Modifies HDHP Limitations
The IRS announced on March 5 that the 2018 health savings account (HSA) contribution limit is reduced from $6,900 to $6,850 for account holders with family coverage under a high-deductible health plan. This change applies to taxable years beginning in 2018. Employers sponsoring HSAs should notify affected participants of the reduced maximum limit and may need to adjust contributions for the remainder of 2018. The annual contribution limit for HSA account holders with self-only coverage has not changed and will stay at $3,450 for 2018. In addition, the IRS modified certain 2018 dollar amounts relating to the definition of a “high-deductible health plan” (HDHP) for HSA purposes: (1) for self-only HDHP coverage, the out-of-pocket maximum decreased from $4,600 to $4,550; and (2) for family HDHP coverage, the minimum deductible decreased from $4,600 to $4,550.
The IRS modifications described above are set forth in Revenue Procedure 2018-18 and reflect the changes to cost-of-living adjustments under the Tax Cuts and Jobs Act of 2017.