IRS Provides Relief for HSA Family Limits

Yesterday, the IRS announced relief for taxpayers with family coverage under a High Deductible Health Plan (HDHP) who contribute to a Health Savings Account (HSA) by permitting such taxpayers to treat $6,900 as the maximum deductible HSA contribution for 2018.

Earlier this year, the IRS announced a $50 reduction in the maximum deductible amount from $6,900 to $6,850 due to a change in the inflation adjustment calculations for 2018 under the Tax Cuts and Jobs Act. However, due to widespread comments and complaints from major stakeholders, the IRS determined that it was in the best interest of “sound and efficient” tax administration to allow taxpayers to treat $6,900 as the 2018 family limit.  The IRS acknowledged that the costs of modifying systems to reflect the reduced maximum, as well as the costs associated with distributing a $50 excess contribution (and earnings) (which in some cases exceeded $50), would be significantly greater than any tax benefit associated with an unreduced HSA contribution.