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IRS Announces Relief to Taxpayers with Family HSAs

by Vita, on April 27, 2018

This applies to all employers offering medical plans with a Health Savings Account (HSA).

Overview

On Thursday, April 26, the IRS announced via Revenue Procedure 2018-27 that it's granting relief to taxpayers who have family coverage under a high deductible health plan and who contribute to a health savings account (HSA).

On May 4, 2017, the maximum for family coverage was issued as $6,900. On March 2, 2018, the limit was reduced to $6,850 for taxpayers with family coverage under HDHPs pursuant to Tax Reform legislation that changed the calculation for 2018 and future years. Under this new guidance, it allows taxpayers to continue to treat the 2018 limit as $6,900.

The new guidance also clarifies how taxpayers who already received a distribution from an HSA of an excess contribution based on the $6,850 deduction limit may treat the distribution as a mistake and repay the HSA without any tax or reporting consequences. In addition, it clarifies how to treat a distribution of an excess contribution (and earnings) based on the $6,850 deduction limit.

Vita Clients: If you are a Vita Client, your dedicated Account Representative will be reaching out soon with a plan of action.

Topics:Pre-Tax

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