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IRB 2018-10 Lowers HSA Family Contribution Limit for 2018

IRB 2018-10

REVERSED BY RP-2018-27.

Read: 2018 HSA family contribution restored to $6,900 – IRS RP 2018-27

The IRS has adjusted the maximum HSA annual contribution limit for employees with family coverage downward to $6,850 for 2018. Employers with employees making the additional $50 contribution (as previously allowed) need to make adjustments accordingly; otherwise, the employee may face taxes and possible penalties on the overage.

On March 5, 2018, the Internal Revenue Service (IRS) released Internal Revenue Bulletin (IRB) 2018-10 covering a broad range of topics, including a reduction in the Health Savings Account (HSA) maximum contribution allowance for 2018 to $6,850 (previously set at $6,900).

Other limits for HSAs (individual contribution, HDHP deductible, etc.) remain unchanged. For more on 2018 HSA contribution limits, see Limits for 2018 Health Savings Accounts announced — IRS.

⇒ To read IRB 2018-10 in full, visit Internal Revenue Bulletin: 2018-10.

 

What is an HSA?

An HSA is a powerful financial tool offered by employers in a Section 125 cafeteria plan. It allows employers and employees to save premium dollars by offering a High-Deductible Health Plan (HDHP) in place of a traditional Preferred Provider Organization (PPO). The higher deductibles and other out-of-pocket costs of the HDHP are offset by contributions to the HSA.

Here are some key points about this benefit:

  • Pre-tax contributions are allowed from both the employer and employee;
  • The employee determines (during open enrollment) how much they will deposit to an HSA during the plan year based on anticipated out-of-pocket expenses and potential retirement savings;
  • The HSA has no annual use-it-or-lose-it provision, so employees need not hesitate in making the maximum annual contribution. Unused funds in the account at the end of a plan year remain in the account for future years, all the way to retirement.
  • Since the employee owns the HSA, if the employee separates from the company for any reason, the account goes with the employee.

For more information, visit:

Section 125 Plan with HSA Module for Additional Employer Tax Savings

Health Flex Spending Account: HSA, FSA, HRA | What’s the difference?

Excellent small business benefit choice, HSA makes 2017 news

Coupling High-Deductible Health Insurance with HSAs, HRAs, or FSAs

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