As the result of a provision in H.R. 1 (“Tax Reform”), the IRS now adjusts for inflation using the Chain Weighted CPI method, believed to be a more accurate calculation, keeping in line with cost-of-living. This applies immediately and has impacted family HSA contributions for 2018.
Typically, the IRS releases the following tax year’s HSA contribution limits in early May for the following tax year. However, the previously released maximum family contribution limit to a Health Savings Account (“HSA”) has been REDUCED from $6,900 to $6,850 in 2018. The self-only maximum remains $3,450.
HSA Account holders who signed up to make the family maximum contribution for 2018 should be aware as pre-tax payroll deductions will need to be updated, reflecting this lower limit. Any family contribution to an HSA in 2018 over $6850 could be subject to taxes and penalties.
Flexible Spending Accounts (“FSAs”) and Commuter or Transit Benefits are also subject to this change, though there does not appear to be an impact for 2018. Previously announced limits still apply. There are no changes to the statutory minimum annual deductible, out-of-pocket maximum or the age 55+ “catch up” contribution limit.
Adoption Assistance Programs are impacted beginning in tax year 2018. See pages 396-397 in the IRS Bulletin No. 2018-10 (below) for more details.
More information about any of these changes can be found in IRS Bulletin No. 2018-10. Enjoy!
To see how your specific plan is affected or for further guidance, contact your ERISA attorney, tax expert or benefits broker. When you work with Insurance Trust, our partnership offers guidance every step of the way with on-going support from our expert team.