Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On March 5, 2018, the Internal Revenue Service released Rev. Proc. 2018-18 under Internal Revenue Bulletin No. 2018-10, reducing from $6,900 to $6,850 the maximum amount an individual with family coverage may contribute to a Health Savings Account (HSA) for the 2018 calendar year. The $50 reduction is effective immediately for the 2018 calendar year.
The IRS had previously announced, in Rev. Proc. 2017-37, that the maximum HSA contribution limits for the 2018 calendar year were $3,450 for individuals with self-only coverage and $6,900 for individuals with family coverage. However, the IRS recalculated its previously released limits to take into account a new inflation measure as required by the Tax Cuts and Jobs Act passed on December 22, 2017. No change to the 2018 individual limitation on HSA contributions for 2018 has been made, so it remains at $3,450.
Employers offering high deductible health plans (HDHPs) with HSAs should notify their employees of this reduction in the family HSA contribution limit and should let employees know who they should contact in order to remove any excess contribution amount and to receive a refund.
If HSA contributions exceed the annual maximum contribution limit, then an excise tax of 6% is imposed on the HSA holder (i.e., the employee) for all excess contributions. This excise tax can be avoided if the excess contribution is corrected and refunded before the last day for filing the HSA holder’s federal income tax return for that calendar year.