Tax Reform Changes HSA Limit

In the spirit of “beware what you wish for” the recent tax reform law included a small surprise for those with health savings accounts (HSAs). Page 400 of IRS Bulletin number 2018-10 contains a revision -downward – of the HSA family contribution limit.

The revision is due to a change in how the amount is calculated. “Chained CPI” will be used for annual inflation adjustments beginning with the 2018 tax year instead of using the CPI (Consumer Price Index).

For the tax year 2018 the new “chained CPI” calculation will reduce the HSA contribution limit for family coverage to $6,850 instead of $6,900. This is a reduction of $50. The self-only limit remains unchanged from the previously announced amount of $3,450.

As a reminder, the self-only limit for 2017 was $3,400. The family limit for 2017 was $6,750.

Anyone who has contributed an amount in excess of $6,850 for 2018 should contact their HSA administrator to address the excess contribution.

The complete IRS bulletin 2018-10 can be found here.

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