HSA Update

As discussed in the post on March 20, 2018, the IRS had made a retroactive reduction to the dollar limit for certain contributions to a health savings account (HSA).  After making this reduction, the IRS later changed the limit back to the originally-announced amount.

As a reminder: An HSA allows taxpayers (or their employers) with high deductible health insurance plans to contribute funds on a pre-tax basis to the HSA for the purpose of paying future medical expenses.

The dollar limit for contributions to HSAs for the 2018 tax year was announced in 2017.  However, as part of the new federal tax law that was enacted on December 22, 2018, the inflation adjustment calculation for certain limits and thresholds used in the tax code has changed.

In Revenue Procedure 2018-18, the IRS announced a retroactive reduction to the HSA contribution limit for the 2018 tax year.  The revised 2018 dollar limit for contributions for those with family coverage was $6,850, which was $50 less than the originally-announced limit of $6,900.  (There was no change to the separate 2018 dollar limit for HSA contributions for those with self-only coverage, and that limit remained $3,450.)

The IRS subsequently issued Revenue Procedure 2018-27, which restores the 2018 dollar HSA contribution limit to $6,900 for those with family coverage.