The IRS recently announced a change in HSA contribution limits for family coverage. Effective for calendar year 2018, the family contribution limit for HSAs has been lowered to $6,850 from the previously set amount of $6,900. This news was contained in Internal Revenue Bulletin (IRB) 2018-10 that contains Revenue Procedure (Rev. Proc.) 2018-19.
This change came as a result of the tax reform law (P.L. 115-97), which changed the annual inflation adjustment factor from the Consumer Price Index (CPI) to a new factor known as 'chained CPI'. This change was anticipated to slow the rate of changes in all programs under the tax code, including HSAs.
The individual HSA contribution limit remains unchanged at $3,450. There have also been no changes to the spending limits for flexible spending accounts or transit accounts.
HSA election changes are allowed year-round, so staying in line with the new $6,850 limit should be an easy adjustment. Clarity Benefit Solutions recommends that participants contributing the family max simply reduce their contribution by $50. Employers should also review their employees’ payroll deductions to ensure that no one exceeds the revised family limit.
For assistance with these recent IRS changes, feel free to contact us at your earliest convenience.