On March 5, 2018, the IRS released a bulletin updating annual limits for the 2018 calendar year due to the new tax law that passed in late 2017. Due to tax reform, the IRS now has a new method to calculate indexed limits, called the Changed Consumer Price Index for All Urban Consumers.

The HSA family maximum contribution limit for 2018 has been decreased to $6,850 from $6,900. This is a $50 decrease from the previously announced 2018 limit. The self-only maximum HSA contribution limit, however, remains unchanged for 2018 at $3,450.

The Adoption Assistance credit was also decreased to $13,810 from $13,840.

HSA elections that were set at the maximum amount for 2018 will need to be decreased to $6,850. Since HSA contributions are determined monthly, there's plenty of time to make the adjustment. For individuals contributing via a Cafeteria Plan, they'll need to make an election change to remain consistent with the new maximum. Since HSA elections can be changed prospectively, this election change is straightforward. For individuals who may have already maxed out their HSA account for 2018, they'll need to take a distribution to correct the excess contribution.

Assurance will continue to monitor any other changes that may come from the indexing change.

Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances