2018 HSA Limit for Family Coverage Changed Again

On April 26, 2018, the IRS released Revenue Procedure 2018-27 to announce another change to the 2018 family health savings account (HSA) contribution limit. The new revenue procedure modifies the family HSA contribution change imposed by the March 5th Revenue Procedure 2018-18.

Earlier this year, a tax law change for 2018 reduced the HSA contribution limit for individuals with family HDHP coverage from $6,900 to $6,850.  After this change was announced, the IRS received complaints that the $50 reduction would be difficult and costly to implement.

The IRS has now decided to allow taxpayers with family HDHP coverage to use the original $6,900 2018 HSA limit, without facing excess contribution penalties.

IMPORTANT DATES

March 5, 2018: The IRS announced that the HSA contribution limit for family HDHP coverage was reduced for 2018, from $6,900 to $6,850.

April 26, 2018: The IRS announced that taxpayers  with family HDHP coverage may treat $6,900 as the HSA contribution limit for 2018.

HIGHLIGHTS

  • The IRS will allow individuals with family HDHP coverage to use the original $6,900 limit for HSA contributions for 2018.
  • The IRS previously announced that the limit was reduced to $6,850 for 2018.
  • Employees with family HDHP coverage may want to change their HSA elections for the $6,900 limit.
What is the new limit?

The IRS has increased the HSA contribution limit for individuals with family coverage under a high deductible health plan (HDHP) by $50 from $6,850 to $6,900. This change is effective for the 2018 calendar year.

Why was the limit changed?

In response to numerous stakeholder concerns, the Treasury Department and the IRS determined it was best to change to limit again back to the original allowed amount published in 2017.

Are other limits changing too?

No, all of the other HSA and HDHP limits for 2018 are unchanged, and remain the same as those announced by the IRS in May 2017.

ACTION STEPS

Employers with HDHPs may want to inform their employees about the HSA contribution limit change for family HDHP coverage. Employees who changed their HSA elections to comply with the reduced limit may wish to change their elections again for the $6,900 limit.

The announced change allows you to contribute up to $6,900. If you received a refund of $50 to comply with the $6,850 deduction limit, you must repay the distribution to the HSA and treat it as the result of a mistake of fact due to reasonable cause or use the $50 distribution to pay for qualified medical expenses to avoid taxes and penalties. Please contact us or your plan administrator with more questions.

 


Categories: American Health Care Act, Benefits News, News You Can Use, Uncategorized
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