Employee Benefits Alert

The Internal Revenue Service originally announced in 2017 that the 2018 contribution limit for health savings accounts (HSAs) corresponding to family coverage under a high-deductible health plan would be $6,900. Then, in March 2018, the IRS announced that the limit had been reduced to $6,850. The IRS has now changed course yet again by announcing that the 2018 limit will revert back to $6,900.

The IRS explained that the about-face is in response to comments it received regarding the numerous unanticipated administrative and financial burdens imposed by the mid-year reduction to the HSA family contribution limit. The IRS concluded that it is in the best interest of “sound and efficient tax administration” to allow taxpayers to follow the original $6,900 limit.

As a result of this further change, employers who took steps to reduce the contributions of employees, revise plan documents, or notify employees of the reduction in the maximum family limit for HSA contributions may now want to undo those changes. The change may require that the plan document be amended and that a summary of material modifications be provided to participants.