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IRS Announces Change to 2018 HSA Family Contribution Limits

3.8.18

IRS Announces Change to 2018 HSA Family Contribution Limits

“IRS Announces Change to 2018 HSA Family Contribution Limits” by Sue Peirce, CPA, MTax | Principal – Audit & Assurance Sue Peirce head shot

Under the new tax law, Tax Cuts & Jobs Act, the annual inflation adjustment factor will be measured by “chained CPI” instead of the traditional Consumer Price Index (CPI). Unfortunately, the first change is a decrease from previously announced amounts.

Changes to HSA Contributions

On March 5, 2018, the IRS released Revenue Procedure 2018-18 notifying taxpayers of a reduction to the maximum contribution limit for Health Savings Account (HSA) for calendar year 2018. The new limit for those with family coverage is $6,850. The previous limit had been set at $6,900. The maximum for self-only coverage did not change, and remains at $3,450 for 2018.

On March 5, 2018, the IRS released changes to family HSA contribution limits for 2018.

The annual limits for Medical Flexible Spending Account, Dependent Care Flexible Spending Account, and Commuter contributions were not impacted.

If you offer an Adoption Assistance Program, contact your advisor at AGP to discuss.

If you currently offer a Health Savings Account option, you will want to ensure that participant contributions for those with family coverage will be adjusted down to the new $6,850 limit for 2018.  Even though the change is only a decrease of $50, excess contributions trigger penalties and the excess contribution must be refunded.

The information contained in this article is current through the published date and may change when regulations and other guidance are issued. Content has been vetted by Apple Growth Partners’ internal tax reform team of licensed CPAs. For more information about this content, or any other matters related to tax reform, please contact your Apple Growth Partners advisor.