Question of the Month

Question of the Month

Q.For a high deductible health plan (HDHP) to qualify for health savings account (HSA) eligibility, what is the minimum amount that an embedded individual deductible can be?
A.For 2018, the embedded individual deductible must be at least $2,700. For an HDHP to qualify for HSA eligibility, an individual with family coverage would need to satisfy the required minimum annual deductible for family  HDHP coverage (which is at least $2,700 for 2018) before any amounts are paid from the HDHP.

2018 HSA Family Contribution Limit Reduced by $50

2018 HSA Family Contribution Limit Reduced by $50

On March 5, 2018, the Internal Revenue Service (IRS) announced a reduction in the maximum annual contribution allowed for Health Savings Accounts (HSAs) in 2018. The change does not affect people whose HSA contributions are based on self-only health coverage, but it does affect those with family coverage under a qualifying High Deductible Health Plan (HDHP). Previously, the 2018 HSA contribution limit for persons with family HDHP coverage was $6,900. That limit is now reduced retroactively to $6,850.
In Revenue Bulletin 2018-10, the IRS explains that the recently-enacted tax reform law requires recalculating inflation-adjusted amounts under various tax code provisions. One of the affected provisions is § 223 pertaining to HSAs. Using the new required method of applying annual inflation adjustments, the 2018 HSA contribution limit for those with family HDHP coverage is $6,850, which is a $50 reduction from the amount previously announced.

HSA Summary

An HSA is a tax-exempt savings account employees can use to pay for qualified health expenses. To be eligible to contribute to an HSA, an employee:

  • Must be covered by a qualified high deductible health plan (HDHP);
  • Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
  • Must not be enrolled in Medicare; and
  • May not be claimed as a dependent on someone else’s tax return.

HSA 2018 Limits

Limits apply to HSAs based on whether an individual has self-only or family coverage under the qualifying HDHP.
2018 HSA contribution limit:

  • Single: $3,450
  • Family: $6,850
  • Catch-up contributions for those age 55 and older remains at $1,000

2018 HDHP minimum deductible (not applicable to preventive services):

  • Single: $1,350
  • Family: $2,700

2018 HDHP maximum out-of-pocket limit:

  • Single: $6,650
  • Family: $13,300*

*If the HDHP is a nongrandfathered plan, a per-person limit of $7,350 also will apply due to the ACA’s cost-sharing provision for essential health benefits.

Originally Published By ThinkHR.com