HSA Family Contribution Limit Changes for 2018
March 7, 2018
On April 26, 2018, the IRS released an update to its Health Savings Account (HSA) contribution limit for families, returning the limit to $6,900 for 2018 (plus $1,000 if the accountholder is making a catch-up contribution). The limit change came on the heels of a previously announced reduction in March.
The individual limit remains unchanged at $3,450. Clients and participants can take action to ensure that everyone is within compliance and aware of the new HSA family limit.
What steps should participants take?
Participants who were contributing the maximum limit of $6,900 prior to the change in March no longer need to lower their contribution to $6,850.
Those who did lower their HSA family contribution to $6,850 to reflect the March change may increase their contribution to $6,900. HSAs allow for contribution changes mid-year, so it’s easy for participants to make the adjustment. The rules state that if you did remove $50 from your HSA due to the reduction in March, you may repay the $50 to your HSA as a mistaken distribution. If you do not decide to repay the distribution, you may treat the distribution as an excess contribution. It's important to note that if the $50 distributed was from employer contributions to your HSA, under certain circumstances the $50 distribution may be taxable if not repaid to the HSA as a mistaken distribution.
Participants can also set up text and/or email alerts to be notified when they’re close to their contribution limit or have exceeded their contribution limit for the tax year by going to the “Statements and Notifications” tab of their online account and selecting “Update Notification Preferences.”
What steps should employers take?
Employers who offer a High-Deductible Health Plan (HDHP) and an HSA should review their employees’ payroll elections and consider whether any employer contributions would put an employee above the family maximum.
If your payroll contributions and employer contributions are transmitted to Discovery Benefits via a vendor file or uploaded through a file in LEAP™, we also have the ability to configure your account to reject any amounts that put participants over the contribution maximum.
We’re in the process of updating our platforms to reflect the contribution limit change. To stay informed on all the latest regulatory updates that relate to benefits and COBRA, subscribe to our blog!
Note: This post was originally published in March 2018. It was updated for accuracy in May 2018.