HRAs & HSAs, Employee Benefits Compliance

IRS Reinstates 2018 HSA Family Maximum Back to $6,900

Money-Saving Tip

The Internal Revenue Service (IRS) announced today that those with family coverage under a High Deductible Health Plan (HDHP) who contribute to a Health Savings Account (HSA) may (once again) treat $6,900 as the maximum deductible HSA contribution in 2018.  In early March the IRS  had retroactively reduced the family maximum from $6,900 to $6,850.

Why did this occur?  As you may recall:

  • The $6,900 annual limitation for 2018 was originally published in 2017 in Revenue Procedure 2017-37.
  • On March 5, 2018, the IRS retroactively reduced the 2018 maximum deductible HSA contribution for taxpayers with family coverage under an HDHP. (IRS Notice 2018-18)  The reduction was only $50, from $6,900 to $6,850, but this created problems for taxpayers who had already contributed $6,900, especially if it was via salary-reduction or if they had already been reimbursed $6,900 for eligible medical expenses in 2018.   It also created problems for employers who had already programmed their payroll systems to accept a specific maximum amount per paycheck in 2018, based on the initial published maximum of $6,900.
  • The reason for the retroactive reduction in March was that the Tax Cuts and Jobs Act (enacted in December 2017) changed various inflation adjustment calculations for 2018.

Today’s announcement refers to Revenue Procedure 2018-27 which provides the relief for affected taxpayers and allows the $6,900 limitation to remain in effect for 2018.