Last year, the IRS announced the 2018 limits for contributions to Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs). As we discussed in our article titled Numerous Hikes for HSA and HDHP Limits, the HSA contribution limit for individuals with family coverage was set at $6,900. As a result of the Tax Cuts and Jobs Act (“TCJA”), this limit has been decreased to $6,850.
Among the changes affecting employee benefits under the TCJA is a provision that changes the way cost of living adjustments (COLAs) are made to certain provisions. Prior to the TCJA, COLAs were generally based on the Department of Labor issued CPI-U. The TCJA replaces the use of the CPI-U with the Chained CPI-U.
On March 5, 2018, the IRS issued Revenue Procedure 2018-18, which modifies certain 2018 cost of living adjustments (COLAs) to reflect the changes made by the Tax Cuts and Jobs Act. The key item of note for health plan sponsors that offer HDHPs is the reduction of the HSA contribution limit for individuals with family coverage from $6,900 to $6,850 for 2018. All other HSA related limits remain unchanged.
Plan sponsors should immediately take action to notify HDHP plan participants of this change so individuals can plan accordingly.
For additional information, please contact the Findley consultant with whom you normally work.Findley Post, Health and Group Benefits