New HSA Family Contribution Limits For 2018

As part of the recent Tax Reform law, the IRS reduced Health Savings Accounts (HSA) limits of the HSA family contribution limit.

The revision is due to a change in ‘how’ the amount is calculated. “Chained CPI” will be used for annual inflation adjustments beginning with the 2018 tax year instead of using the CPI (Consumer Price Index).

For the tax year 2018 the new “Chained CPI” calculation will reduce the HSA contribution limit for family coverage to $6,850, instead of $6,900. This is a reduction of $50. The self-only limit remains unchanged from the previously announced amount of $3,450. Client and participants should take action to ensure everyone is within compliance. Anyone who has contributed an amount more than $6,850 for 2018 should contact their HSA administrator to address the contribution.

According to Kiplinger, the IRS recalculated the inflation adjustment used to regulate the maximum HSA contributions for the year. The IRS then announced that $6,850 was the new limit, but this caused problems for participants who had already contributed the maximum amount.

The complete IRS bulletin 2018-10, can be found by here.

Steps to take as a participant:

• If you’ve removed $50 from your HAS due to the reduction in price, you may repay the $50 to your HSA as a mistaken distribution without taxes or penalties.
• If you decide not to repay the distribution, you may treat this as excess contribution.

Steps to take as an employer:

• Employers who offer High-Deductible Health Plans and HSA, should review their staffer’s contributions and decide whether or not if employer contributions would exceed the family maximum.

Be prepared because the contribution limits for 2019 will likely be announced in the next month.