On May 4, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-37 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2018. An HSA is a tax-exempt savings account employees can use to pay for qualified health expenses.
To be eligible for an HSA, an employee:
- Must be covered by a qualified high deductible health plan (HDHP);
- Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
- Must not be enrolled in Medicare; and
- May not be claimed as a dependent on someone else’s tax return.
The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:
- 2018 HSA contribution limit:
- Single: $3,450 (an increase of $50 from 2017)
- Family: $6,900 (an increase of $150 from 2017)
- Catch-up contributions for those age 55 and older remains at $1,000
- 2018 HDHP minimum deductible (not applicable to preventive services):
- Single: $1,350 (an increase of $50 from 2017)
- Family: $2,700 (an increase of $100 from 2017)
- 2018 HDHP maximum out-of-pocket limit:
- Single: $6,650 (an increase of $100 from 2017)
- Family: $13,300* (an increase of $200 from 2017)
*If the HDHP is a nongrandfathered plan, a per-person limit of $7,350 also will apply due to the ACA’s cost-sharing provision for essential health benefits.
Note: The U.S. House of Representatives recently passed a bill to repeal and replace portions of the Affordable Care Act (ACA). Included in that bill is a proposal to increase significantly the annual limits on HSA contributions, going back to calendar year 2017. The House bill now moves to the Senate where its fate is uncertain.