Blog Posts: Benefits Law Update

IRS Reduces 2018 HSA Family Contribution Limit

UPDATE: On April 26, 2018, the IRS reversed course and restored the limit on deductible contributions to health savings accounts (HSAs) for individuals with family coverage under a high deductible health plan to $6,900, the original amount announced last fall. According to the IRS, individuals who received an excess contribution distribution based on the $6,850 limit announced earlier this year may either treat the distribution as based on mistake of fact and restore the contribution, or maykeep the distribution free from penalty taxes as a distribution of an excess contribution.

The IRS has lowered the dollar limit on deductible contributions to health savings accounts (HSAs) for individuals with family coverage under a high deductible health plan. The new limit for 2018 is $6,850, down from the $6,900 limit announced last fall.

Rev. Proc. 2018-18, issued on March 5, 2018, adjusted the limit to account for changes resulting from the tax reform bill passed in December. The limit for individuals with self-only coverage remains $3,450. There is no change to deductible and out-of-pocket expense limits for a plan to qualify as an HDHP.

Employers who have already contributed the maximum amount to employees' HSAs for 2018 based on the higher limit should correct the contribution as necessary, and employers offering HDHPs may wish to notify employees that may be affected by the change.

Rev. Proc. 2018-18 announces inflation adjustments and modifies a variety of tax-related limitations, including limits on excludable amounts under adoption assistance programs. The limit for benefits that may be excluded from income under an adoption assistance program is now $13,810, down from $13,840 as previously announced. The income phase-out for this exclusion now begins at $207,140 and fully phases out at $247,140, down from $207,580 and $247,580.

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