Yesterday, the IRS released Revenue Procedure 2018-18 to reflect modified inflation-adjusted figures under the Tax Cuts and Jobs Act (TCJA) passed at the end of 2017. The new approach under the TCJA uses a slightly different Chained CPI calculation for such adjustments.
The result is the that IRS has revised downward the 2018 family HSA contribution limit from $6,900 to $6,850.
No other HDHP or HSA limit was modified.
Modifying 2018 Family HSA Elections
Employers with benefit administration systems will need to work with the system administrator to revise the maximum family limit in the system, and recalculate deductions for any employee who had elected to contribute up to the original $6,900 limit.
Corrective Action Where Already Contributed $6,900
Employers that already contributed $6,900 to an employee’s HSA will want to take corrective action by requesting the HSA custodian return the excess contribution to the employer before the end of 2018 to avoid adverse tax consequences for the affected employees.
See slide 45 of our Office Hours webinar Go All the Way with HSA for complete details.
Adoption Assistance Programs Also Affected
Revenue Procedure 2018-18 also reduces the 2018 maximum employer-provided adoption assistance program exclusion amount from $13,840 to $13,810.
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).