On May 5, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-37 , which lists the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for calendar year 2018. The 2018 dollar amounts are listed:
- HSA. The maximum HSA contribution limit;
- HDHP. The maximum deductible amount for high deductible health plans (HDHPs); and
- HDHP. The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.
HOWEVER, the H.S.A. amounts will change for 2018 if the American Health Care Act (AHCA) – which narrowly passed in the House last week — is subsequently passed by the Senate and eventually becomes law. The House-passed AHCA would almost double contribution limits, from $3,450 to $6,650 for single coverage in 2018, and from $6,900 to $13,300 for family coverage in 2018. Additionally, the AHCA would reduce the penalty from 20% to 10% for non-medical withdrawals from H.S.A.s, and allow use of H.S.A funds to pay for over-the-counter medications without a prescription.
|Type of Limit||2017||2018||Change|
|HSA Contribution Limit||Self-only||$3,400||$3,450||$50 increase|
|HSA Catch-up Contributions (not subject to adjustment for inflation)||Age 55 or older||$1,000||$1,000||No change|
|HDHP Minimum Deductible||Self-only||$1,300||$1,350||$50 & $100 increase|
|HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums)||Self-only||$6,550||$6,650||$100 increase|
H.S.A.s are special medical reimbursement accounts (under § 223) that generally can be funded only for individuals who are enrolled in “high deductible health plans” (HDHPs) as defined under IRC § 223(c)(2)(A), and who are not enrolled in non-HDHP health plans. (There are limited exceptions; H.S.A. contributions can be made by or on behalf of individuals who are also enrolled in “limited purpose” health flexible spending accounts, in “permitted insurance” under IRC § 223(c)(3), in “disregarded coverage” under IRC § 223(c)(1)(B)(ii) or in “preventive care” under § 223(c)(2)(C).)
The annual limit on H.S.A. deductions is at Code section 223(b)(2)(A)
High deductible health plan definition, annual deductible minimum and out-of-pocket maximum are in Code section 223(c)(2)(A). The out-of-pocket maximum includes in-network deductibles, copayments and coinsurance, but does not include premiums or balance-billing for out-of-network services.
Non-HDHP Plan Limits
The ACA also imposes a limit on out-of-pocket expenditures for “essential health benefits” in Non-HDHPs, and these limits are higher than those listed above for HDHPs. For non-HDHPs, the 2018 limits are:
- $7,350 for self-only coverage, and
- $14,700 for family coverage.
Initially, the out-of-pocket limits were the same for both HDHPs and non-HDHPs, but the annual inflation adjustments are determined by different federal departments using different methodologies, and this has resulted in different dollar amounts. Specifically, the Department of Health and Human Resources (HHS) sets the non-HDHP inflation-adjusted amounts, and the IRS determines the HSA and HDHP inflation-adjusted amounts. The HHS 2018 amounts were announced in the 2018 Notice of Benefit and Payment Parameters.
The 2017 and 2018 Non-HDHP out-of-pocket maximum limits are listed below:
|Type of Limit||2017||2018||Change|
|Non-HDHP Maximum Out-of-pocket Expense Limit||Self-only||$7,150||$7,350||$200 increase|
- HFSA limits for 2018 are in Rev. Proc 2017-37, section .2, at https://www.irs.gov/pub/irs-drop/rp-17-37.pdf
- HSA & HDHP limits are in Code section 223, and 2017 indexed amounts are in Rev. Proc. 2016-28 at https://www.irs.gov/pub/irs-drop/rp-16-28.pdf .
- 2018 limits for Non-HDHPs are on page 3 of the Fact Sheet on the 2018 Benefits and Payments Parameters, at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/CMS-9934-F-Fact-Sheet-12-16-16.pdf.