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IRS Announces Family Contributions Changes for HSAs
by Vita, on March 8, 2018
This applies to all employers offering medical plans with a Health Savings Account (HSA).
Overview
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 change was released yesterday as the IRS published Internal Revenue Bulletin (IRB) 2018-10 that contains Revenue Procedure (Rev. Proc.) 2018-19. Please note there is no impact to the individual contribution limit ($3,450) or catch-up contribution limit ($1,000).
This change came as a result of the tax reform law (P.L. 115-97) that 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.
Vita Clients: Your Vita representative will be contacting you should this change impact your organization's benefit plans.
Below is a chart outlining the impact of the changes:
| Enrollment | Contribution | Impact |
| Employee is enrolled in single qualifying high deductible health plan (HDHP) coverage |
Not applicable | No change necessary |
| Employee is enrolled in family qualifying HDHP coverage |
Employee (+ employer contributions if applicable) are set up to reach $6,900 by the end of 2018; employee wishes to cure prior to the end of 2018. |
If no change is made, an excise tax of 6% will be imposed on the additional $50 unless the employee changes his or her salary reduction amount going forward and reduces the total contributions to $6,850 or less. |
| Employee is enrolled in family qualifying HDHP coverage |
Employee (+ employer contributions if applicable) are set up to reach $6,900 by the end of 2018; employee wishes to cure prior to the end of 2018. |
If no change is made, an excise
|
| Employee is enrolled in family qualifying HDHP coverage |
Employer-only contributions have reached $6,900 by the end of 2018 |
An employee's HSA balance is non-forfeitable at all times regardless of who made contributions to the account, unless narrow exceptions occur. This includes contributing more
|
