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IRS Updates HSA Contribution Limit in 2018

IRS Releases Revised Cost-of-Living Adjustments Impacting Contributions to HSAs in 2018

One of the provisions in the tax reform bill enacted late last year, the Tax Cuts and Jobs Bill, was a change in the way the IRS was to calculate cost-of-living increases. On March 5, 2018, the IRS released Revenue Procedure 2018-18 in Internal Revenue Bulletin 2018-10 which provides what these new recalculated limitations are. Of importance to HSA participants is a reduction in the maximum family HSA contribution for those with family coverage under an HDHP from $6,900 (as previously announced in Rev. Proc. 2017-37 on May 4, 2017) to a new limit of $6,850. 

This could mean that election changes may be required and excess contributions may need to be returned (e.g., for individuals who have already contributed the full family amount). Other benefit limits (e.g., Health Care and Dependent Care FSAs and Commuter Benefits) were not impacted. 

Below is the text of Rev. Proc. 2018-18 relating to HSAs:


“SECTION 4. 2018 INFLATION ADJUSTED AMOUNTS FOR HEALTH SAVINGS ACCOUNTS UNDER § 223
Annual contribution limitation. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,850.

High deductible health plan. For calendar year 2018, a ‘high deductible health plan’ is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.”

Click here for the full announcement.

2018 Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans

HSA contribution limit (employer + employee)

Self-only: $3,450
Family: $6,850*

HSA catch-up contributions (age 55 or older)*

$1,000

HDHP minimum deductibles

Self-only: $1,350
Family: $2,700

HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)

Self-only: $6,650
Family: $13,300

*IRS Announced change on Monday, March 5th to the Family HSA Contribution Limit.

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