The IRS has announced the 2019 calendar year dollar limits for health savings account (“HSA”) contributions, and the minimum deductible amounts and maximum out-of-pocket expenses for high deductible health plans (“HDHPs”). By law, these limits are indexed annually to adjust for inflation.
Background. HSA contributions may only be made by or for individuals who enroll in HDHPs, among other requirements. Internal Revenue Code Section 223(c)(2)(A) provides the definition, annual deductible minimum and out-of-pocket maximum for HDHPs.
NOTE: The HDHP out-of-pocket maximum includes in-network deductibles, copayments and coinsurance, but does not include premiums or balance-billing for out-of-network services.
Revenue Procedure 2018-30. For 2019, the HSA contribution limit for a self-only HSA is $3,500 (a $50 increase from calendar year 2018) and $7,000 for a family HSA (a $100 increase from calendar year 2018).
To qualify as an HDHP in 2019, a plan must have a minimum annual deductible of at least $1,350 for self-only coverage (no change), and $2,700 for family coverage (no change). The maximum out-of-pocket expenses permitted for an HDHP is $6,750 for self-only coverage (a $100 increase) and $13,500 for family coverage (a $200 increase).
Takeaway for Employers. Employers are advised to begin updating payroll and plan administration systems to reflect the 2019 cost-of-living adjustments. In addition, employers should incorporate the 2019 HSA limits into all relevant participant communications, such as open enrollment and communication materials, plan documents and summary plan descriptions.
Rev. Proc. 2018-30 is available at: https://www.irs.gov/pub/irs-drop/rp-18-30.pdf
IRS Reinstates Family Deduction Limit for HSA Contributions in 2018
The IRS has announced, in Revenue Procedure 2018-27, relief for taxpayers with family coverage under a High Deductible Health Plan (“HDHP”) who contribute to a Health Savings Account (“HSA”). Specifically, for 2018, taxpayers with family coverage under a HDHP may treat $6,900 as the maximum deductible HSA contribution.
Earlier this year, the IRS announced that inflation adjustments made under the Tax Cuts and Jobs Act would reduce the previously announced annual HSA limit for family coverage to $6,850 (a $50 reduction). To avoid confusion, the IRS has now restored the $6,900 deduction limit for 2018.
Rev. Proc. 2018-27 is available at: https://www.irs.gov/pub/irs-drop/rp-18-27.pdf