Due to the new tax reform law, on March 5, 2018, the IRS released Revenue Procedure 2018-18 announcing that it has recalculated some of its previously-released 2018 limits for health saving accounts (“HSAs”), Archer medical savings accounts (“MSAs”), adoption assistance programs, and the small employer health insurance credit.
HSAs
The 2018 HSA maximum contribution for the family tier is from $6,900 to $6,850. The other HSA limits remain the same.
Note that:
1. Although the limit is announced on an annual basis, it is actually determined monthly so individuals who are not HSA-eligible for all of 2018 are generally limited to the number of months they are HSA-eligible and enrolled in family coverage multiplied by $570.83 per month (rather than $575 per month). HSA elections can be changed monthly.
2. Individuals who already contributed the full 2018 limit (i.e., who front-loaded) or otherwise end up going over the limit need to contact the HSA trustee/custodian for a taxable distribution ($50 if HSA-eligible all year) by the due date of his or her 2018 tax return to avoid penalty.
Small Employer Health Insurance Credit
An eligible small employer may claim, subject to a phase-out, a credit equal to 50% of non-elective contributions for health insurance for its employees. The credit is reduced under certain circumstances, including if the average annual full-time equivalent wages per employee are more than $26,600 (was $26,700).
Other programs affected: Archer MSAs, Adoption Assistance Programs. For more information contact your payroll company or visit https://www.irs.gov/taxtopics
*This is not a substitute for legal advice and should not be used as such. Do not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider.