IRS Issues Update for 2018 HSA Contributions

The 2018 contribution limit for health savings accounts (HSAs) linked to family coverage will be $6,850—not $6,900, as the IRS had previously announced. The IRS recalculated the limit because the Tax Cuts and Jobs Act that passed at the end of 2017 applies the so-called chained consumer price index (chained CPI) to increases in HSA and a few other employee benefit contribution limits.
In its Internal Revenue Bulletin No. 2018–10, released March 5, the IRS clarified that:

• For HSAs, the annual tax-deductible contribution limit for tax year 2018 will stay at $3,450 for HSA account holders with self-only coverage through a high-deductible health plan but has been lowered to $6,850 for account holders with family coverage through a high-deductible plan.
• For employer adoption assistance programs, the maximum amount that can be excluded from an employee's gross income for qualified adoption expenses is reduced to $13,810 from $13,840. Also, the adjusted gross income threshold after which the adoption exclusion begins to phase out is reduced to $207,140 from $207,580.
• Health care flexible spending accounts (FSAs), transit and other benefit limits now linked to the chained CPI were not affected for 2018.

​Because these changes apply to tax year 2018, "employees contributing to an HSA should be informed of the reduced maximum limit, and adjustments in contributions for the remainder of 2018 may be needed. Employees who have already contributed the maximum amount for 2018, such as a one-time HSA contribution from a beginning-of-the-year bonus payment, will need to receive a refund of the excess contribution.
 
Adapted from SHRM 2018