Each year, the IRS announces the newly adjusted limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) based on the rate of inflation. The new contribution limits and HDHP cost-sharing limits take effect next calendar year, January 1st, 2018.
To review, an HSA is a savings account set up for individuals on high-deductible health plans. HSAs are not subject to income tax during the year they are deposited and unspent funds are rolled over into the following year.
Finances in HSAs may be spent on long-term health care, prescription drugs, and various other approved medical expenses. The exact definition of approved medical expenses is regulated by the IRS (Internal Revenue Service).
A high-deductible health plan is an insurance plan with lower premiums and higher deductibles. The IRS sets the approved minimum deductible and out-of-pocket maximum. These rates change with the cost of living.
For calculating contribution limits, the IRS does not adjust based on varying costs in different states, unlike other payments based on cost of living, such as student loan repayment programs. Cost of living is determined based on the average cost of common goods and services across the country as compared to the average salary of single and married adults. ￼￼￼￼￼￼￼
The following shows the HSA/HDHP limits for 2018 as compared to 2017. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.
HSA Contribution Limit
- Self-only: $3,400 $3,450; Up $50
- Family: $6,750 $6,900; Up $150
HSA Catch-up Contributions
(not subject to adjustment for inflation)
- Age 55 or older: $1,000 $1,000; No change
HDHP Minimum Deductible
- Self-only: $1,300 $1,350; Up $50
- Family: $2,600 $2,700; Up $100
HDHP Maximum Out-of-pocket Expense Limit
(deductibles, copayments and other amounts, but not premiums)
- Self-only: $6,550 $6,650; Up $100
- Family: $13,100 $13,300; Up $200
This means that as an individual with an HSA, $50 more can be deposited into your account for 2018, over the cap for this year. For family plans in 2018, you can contribute $150 more.
The HSA catch-up contribution limit has not changed. A catch-up contribution is an additional amount set aside for individuals or couples over the age of 55 that utilize HDHPs. There has been no change to the limit, so up to $1,000 can still be deposited into the applicable HSA.
The last change to the HSA catch-up contribution limit saw $1,000 added to the cap. It is for this reason the IRS has elected to leave the limit where it is currently set. To help your employees find out if they are eligible to make catch-up contributions, advise them to contact a High Ridge representative.
High Ridge Insurance Services can help employers stay apprised of all changes as they pertain to their insurance, retirement, or other benefits plans. We are also here to help introduce any of those changes in accordance to the new laws or financial caps. High Ridge can also ensure that your company’s employees receive the proper materials and paperwork involved in updates regarding HSA contribution limits far in advance of the January 1st, 2018 deadline, as well as any other material necessary concerning benefits changes.
This summary serves only as a brief overview of the latest updates to HSA limits. Be sure to contact High Ridge for specialized questions on these or other topics to ensure you receive proper, customized guidance for your company.
High Ridge Insurance Services will continue to post updates on the most recent IRS policies as it pertains to insurance guidelines and guidance affecting employers, benefits, and related legal and compliance issues. For further information or inquiries, please visit our contact page to reach us directly.