The Tax Cuts and Jobs Act (“Tax Act”) enacted late last year has affected the 2018 calendar year maximum Health Savings Account (HSA) contribution for individuals with family coverage under a high deductible health plan (HDHP). On March 5, 2018, the Internal Revenue Service (IRS) released Revenue Procedure 2018-18 which announced that the maximum contribution for those with family coverage has been reduced from $6,900 to $6,850. This reduction was triggered by the Tax Act’s changes to the operation of the consumer price index for making annual adjustments to the HSA limits. The IRS’ other HSA and HDHP limits for 2018 remain the same.
This reduction is particularly important for any individual with family HDHP coverage who has already contributed $6,900 for 2018 and must receive a refund of the excess contribution in order to avoid an excise tax.
Action Steps:
- 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.
Our
Legislative Alert contains additional information on this reduction in the maximum HSA contribution for those with family HDHP coverage.
