News & Press: Regulation

IRS Releases Revised Cost-of-living adjustments impacting contributions to HSAs (and other benefits)

Monday, March 5, 2018   (0 Comments)
Share |
One of the provisions in the tax reform bill enacted late last year, the Tax Cuts and Jobs Bill, was a change in the way the IRS was to calculate cost-of-living increases.  Today, the IRS released Revenue Procedure 2018-18 in Internal Revenue Bulletin  2018-10 which provides what these new recalculated limitations are. Of importance to ECFC members is a reduction in the maximum family HSA contribution for those with family coverage under an HDHP from $6,900 (as previously announced in Rev. Proc. 2017-37 on May 4, 2017) to a new limit of $6,850. This could mean, that election changes may be required and excess contributions may need to be returned (e.g., for individuals who have already contributed the full family amount). MSAs and adoption assistance benefit thresholds have also been impacted.   Other benefit limits (e.g., dependent care and transit) were not impacted. 

 

The text of Rev. Proc. 2018-18 relating to HSAs follows:
“SECTION 4. 2018 INFLATION ADJUSTED AMOUNTS FOR HEALTH SAVINGS ACCOUNTS UNDER § 223
Annual contribution limitation. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,850.

High deductible health plan. For calendar year 2018, a “high deductible health plan” is defined under § 223(c)(2)(A) 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 or $13,300 for family coverage.”