Let’s Start Over – 2018 Health Savings Account Cost of Living Adjustments

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March 7, 2018

It is unusual for the IRS to implement a retroactive change to a previously announced limit (whether it be qualified plan limits or HSA limits).  Especially when the change is a reduction in the amount that taxpayers can save/contribute.  But who would disagree that 2018 has been a bit unusual.  On March 5, 2018 the IRS in Notice 2018-18 revised its earlier pronouncement on the 2018 limit on HSA contributions for a taxpayer eligible for family high deductible health plan (HDHP) coverage, reducing the maximum contribution limit from $6,900 to $6,850.  The change is the result of the use of a new index for determining cost of living increases (Chained CPI-U rather than CPI-U).  The new index was mandated by the 2018 Budget Act.

Below is a chart which reflects the all of the relevant 2018 limits for HSAs, including the recent IRS change.

HSA/HDHP Requirement Cost-of-Living Adjustments
Limit on HSA Contributions – Self-only HDHP 2017-$3,400

2018-$3,450

Limit on HSA Contributions – Family HDHP 2017-$6,750

2018-$6,850

HDHP Required Deductible – Self-only HDHP 2017-$1,300

2018-$1,350

HDHP Required Deductible – Family HDHP 2017-$2,600

2018-$2,700

HDHP Out-of-pocket Maximum – Self-only HDHP 2017-$6,550

2018-$6,650

HDHP Out-of-pocket Maximum – Family HDHP 2017-$13,100

2018-$13,300

HSA Catch-up Contribution Limit 2017-$1,000

2018-$1,000

All of the above are for calendar year 2018.

For further information, please contact Attorney Mary Ellen Schill, who prepared this article, or any of the attorneys within the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

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