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IMA Tax Policy Blog

HSA Contribution Limit: Changes and What it Means for You

Sikich LLP is an IMA B2B Partner…

Under the Tax Cuts and Jobs Act, Health Savings Account (HSA) contributions for family coverage decreased from $6,900 to $6,850. The $50 reduction for employees with family coverage was applied immediately, which is why representatives of the House Ways and Means Committee and the American Benefits Council have requested transition relief from this mid-year change, hoping to get the IRS to agree to wait to implement the limit until 2019. With this limit in effect, excess contributions would be considered employees’ taxable income and could be subject to an extra 6 percent excise tax. Employees will have the ability to receive a distribution from their HSA, if the IRS does not grant temporary relief for the year 2018 (the distribution would have to equal any existing amount that exceeds $6,850). In the meantime, employers and employees do not need to take immediate action while they wait for a decision from the IRS.

 

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