On April 26, 2018, the IRS released Revenue Procedure 2018-27 to announce another change to the 2018 the 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.
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) 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.
All other HSA & HDHP limits for 2018 remain unchanged.
What do I need to do?
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 your plan administrator with more questions.
This Article has been updated from it's original post to reflect updated information published by the IRS on April 26, 2018.
You can read the original posting below.
On March 5, 2018, the Internal Revenue Service (IRS) released Revenue Procedure 2018-18 to announce changes to certain tax limits for 2018, including a reduced contribution limit for health savings accounts (HSAs).
The new tax law enacted late last year—the Tax Cuts and Jobs Act—changed the consumer price index for making annual adjustments to the HSA limits. Based on this new index, the IRS lowered the HSA contribution limit for individuals with family coverage under a high deductible health plan (HDHP) from $6,900 to $6,850. This change is effective for the 2018 calendar year. The IRS’ other HSA and HDHP limits for 2018 remain the same.
Employers with HDHPs should inform employees about the reduced HSA contribution limit for family HDHP coverage. Employees may need to change their HSA elections going forward to comply with the new limit. Also, any individuals with family HDHP coverage who have already contributed $6,900 for 2018 must receive a refund of the excess contribution in order to avoid an excise tax.
- The IRS reduced the HSA contribution limit for 2018 for individuals with family HDHP coverage by $50 to $6,850.
- All other HSA and HDHP limits for 2018 remain the same as those previously announced by the IRS.
- Employees with family HDHP coverage may need to change their HSA elections to comply with the new limit.
The following chart shows the HSA/HDHP limits for 2018, as adjusted for the IRS’ recent guidance.