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IMA Wellness Blog

IRS Gives Two Healthcare Savings Tactics to Small Businesses

by Terry Sheridan, AccountingWeb

The IRS has announced two health care savings tactics for small employers and certain taxpayers who contribute to health savings accounts (HSAs).

Here are the details for each group:

Taxpayers with High Deductible Health Plans Who Contribute to HSAs 

Taxpayers with family coverage under these plans will be allowed to make a slightly larger contribution this year than the Tax Cuts and Jobs Act mandates. The law reduced the allowable HAS contribution by $50, to $6,850, because of a change in inflation adjustment calculations. But the IRS is allowing a $6,900 maximum contribution under Revenue Procedure 2018-27.

The guidance applies to the calendar year 2018. It modifies and supercedes the second sentence of Section 4 of Revenue Procedure 2018-18, which for calendar year 2018 addresses the annual limits on deductions under Section 223(b)(2)(B) for a taxpayer with family coverage under a high deductible health plan.

Employers Who Want to Claim the Small Business Health Care Tax Credit

Small employers typically must give employees a qualified health plan from a Small Business Health Options Program (SHOP) Marketplace to qualify for the Small Business Health Care Tax Credit. Small employers also may claim the credit only for two consecutive years.

The IRS guidance, however, helps employers who first claim the credit for all or part of 2016 or a later taxable year for SHOP coverage but don’t have SHOP Marketplace plans available for employees for all or part of the credit period because the county in which the employer is based doesn’t offer the plans.

The IRS, therefore, allows these employers to claim the credit for health insurance coverage provided outside of a SHOP Marketplace for the remainder of the credit period if that coverage would have qualified under the rules in force prior to Jan. 1, 2014.

Notice 2018-27 offers guidance on calculating the credit for the new relief under Section 45R of the tax code. The IRS states that the notice doesn’t affect prior transition relief for the credit that was provided in 2014, 2015 and 2016.

The notice took effect April 27 and applies to periods after Dec. 31, 2016.


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