Benefits Buzz

2018 Family HSA Contribution Limit Adjusted Back to $6,900

Posted on May 1st, 2018

On April 26, the Internal Revenue Service (IRS) announced relief for taxpayers with family coverage under a High Deductible Health Plan (HDHP) who can contribute to a Health Savings Account (HSA).

For 2018, taxpayers with family coverage under an HDHP may treat $6,900 as the maximum deductible HSA contribution. This relief is a reversal of a previous announcement in March that lowered the maximum family contribution in accordance with the Tax Cuts and Jobs Act.

Sound confusing? Here's a play-by-play of everything that's happened:

  • May 4, 2017 - The IRS publishes Rev. Proc. 2017-37 which includes HSA contribution limits for 2018. The family contribution limit is set at $6,900.
     
  • December 22, 2017 - The Tax Cuts and Jobs Act is signed into law. The law changes the inflationary measure used to adjust annual contribution limits to various benefit programs, including HSAs. Contribution limits will now be tied to the Chained CPI starting in 2018. The Chained CPI is a little bit lower than the more traditional CPI.
     
  • March 5, 2018 - The IRS releases Bulletin No. 2018-10 which contains Rev. Proc. 2018-18. This indicates the family contribution limit for HSAs is being retroactively changed. The family contribution limit for 2018 is reduced by $50 and is set at $6,850. This was a direct result of tying adjustments to contribution limits to the Chained API.
     
  • April 26, 2018 - The IRS releases Rev. Proc. 2018-27. This indicates the family contribution limit will be increased back to $6,900 for 2018. This was attributed to comments and concerns the IRS received about the unanticipated administrative and financial burdens the $50 reduction would create for employers and individuals

After all of this, we are right back to the original family contribution limit of $6,900 for this year. Through everything, the individual contribution limit was unaffected. The limit remains unchanged at $3,450. Additionally, the catch-up contribution for those age 55 and older remains at $1,000.

Flexible Benefit Service Corporation (Flex) will be communicating relevant information to our HSA clients who may be affected by these changes.

For more information about Chained API, you can check out our blog post here.

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