Due to the Tax Cuts and Jobs Act that passed in late 2017, the IRS has recalculated (and lowered) Family HSA contribution limits for 2018. Employees exceeding the maximum limit could face up to a 6% excise tax at the end of the year. If you have employees who chose to make a one-time, maximum contribution, they may require a refund for excess funds.
HSA Contribution Limit Changes
The Society of Human Resources reported the following:
• For HSAs, the annual tax-deductible contribution limit for tax year 2018 will stay at $3,450 for HSA account holders with self-only coverage through a high-deductible health plan but has been lowered to $6,850 for account holders with family coverage through a high-deductible plan.
• For employer adoption assistance programs, the maximum amount that can be excluded from an employee’s gross income for qualified adoption expenses is reduced to $13,810 from $13,840. Also, the adjusted gross income threshold after which the adoption exclusion begins to phase out is reduced to $207,140 from $207,580.
• Health care flexible spending accounts (FSAs), transit and other benefit limits now linked to the chained CPI were not affected for 2018.
Inform any affected HSA participants about the reduction today.