On May 4, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-37 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2018. An HSA is a tax-exempt savings account employees can use to pay for qualified health expenses.
To be eligible for an HSA, an employee:
- Must be covered by a qualified high deductible health plan (HDHP);
- Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
- Must not be enrolled in Medicare; and
- May not be claimed as a dependent on someone else’s tax return.
The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:
- 2018 HSA contribution limit:
- Single: $3,450 (an increase of $50 from 2017)
- Family: $6,900 (an increase of $150 from 2017)
- Catch-up contributions for those age 55 and older remains at $1,000
- 2018 HDHP minimum deductible (not applicable to preventive services):
- Single: $1,350 (an increase of $50 from 2017)
- Family: $2,700 (an increase of $100 from 2017)
- 2018 HDHP maximum out-of-pocket limit:
- Single: $6,650 (an increase of $100 from 2017)
- Family: $13,300* (an increase of $200 from 2017)
*If the HDHP is a nongrandfathered plan, a per-person limit of $7,350 also will apply due to the ACA’s cost-sharing provision for essential health benefits.
Note: The U.S. House of Representatives recently passed a bill to repeal and replace portions of the Affordable Care Act (ACA). Included in that bill is a proposal to increase significantly the annual limits on HSA contributions, going back to calendar year 2017. The House bill now moves to the Senate where its fate is uncertain.
ThinkHR will continue to monitor developments in this area.