ComplianceMINUTE | Dan Kuperstein | ERISA Penalties Increase for Form 5500 Violations!

IRS Sets HSA/HDHP Limits for 2018 | August 10, 2017

By | Senior Vice President, Compliance | 8.10.2017
On May 4, 2017, the IRS issued Revenue Procedure 2017-37, which provides the 2018 contribution and coverage limits for Health Savings Accounts (or HSAs) and high deductible health plans. The annual increases in HSA contribution levels are based upon cost of living adjustments and are effective January 1, 2018. Attorney Dan Kuperstein explains.

Resources:
IRS Revenue Procedure 2017-37
ACA(now) – News on Washington

 

Video Transcript: 
Hi, I’m Dan Kuperstein, and welcome to this episode of ComplianceMINUTE.

On May 4, 2017, the IRS issued Revenue Procedure 2017-37, which provides the 2018 contribution and coverage limits for Health Savings Accounts (or HSAs) and high deductible health plans. The annual increase in HSA contribution levels are based upon cost of living adjustments and are effective January 1, 2018.

So, what are the new limits?
The 2018 HSA maximum contribution limit for an individual with self-only coverage will increase to $3,450 (which is up from $3,400 for 2017). The 2018 HSA maximum contribution limit for an individual with family coverage will increase to $6,900 (which is up from $6,750 for 2017). HSA catch-up contributions, for those age 55 or older, remain unchanged at $1,000.

The IRS also clarified that the 2018 high deductible health plan out-of-pocket maximum limits will increase. Specifically, the maximum out-of-pocket limits for HDHPs for 2018 will be $6,650 for individual (or self-only) coverage (up from $6,550 for 2017) and $13,300 for family coverage (up from $13,100 for 2017).

Finally, both the minimum and maximum annual deductibles for HDHPs will increase in 2018 as well. HDHPs in 2018 will be required to have a minimum annual deductible of at least $1,350 (which is up from $1,300 in 2017) for individual coverage and at least $2,700 for family coverage (which up from $2,600 in 2017).

How is this different from last year? Well, in contrast to 2017, when only one of these amounts changed from the prior year, all of them are scheduled to increase for 2018. Additionally, the HDHP minimum deductibles are increasing for the first time since 2015.

Additionally, it should be noted that because the increases to the HDHP out-of-pocket maximums are larger than the increases to the HSA contribution limits, this will result in some individuals having to pay more out-of-pocket expenses without the benefit of the HSA tax break.

One important reminder or takeaway for employers is that it’s important not to confuse the HDHP’s maximum annual deductible limit with the Affordable Care Act’s (or ACA’s) cost-sharing maximum, as these are two separate dollar amounts and each has distinct compliance requirements.

For 2014, the HDHP and ACA limits were the same dollar amount, so the ACA limit appeared to have little independent significance. However, beginning in 2015, the limit amounts diverged, and the gap between them has continued to grow.

For 2017, the ACA cost-sharing limits are $7,150 for self-only and $14,300 for family coverage, while the HDHP limits are $6,550 for self-only coverage and $13,100 for family coverage.

For more information on this and other ACA topics, visit our Knowledge Center at corpsyn.com. Thank you.