The IRS has released updated figures for Health Savings Accounts, raising 2018 HSA contribution limits, minimum deductibles, and maximum out-of-pocket expenses.
*On Monday, March 3, 2018, the IRS released revised cost-of-living adjustments, which affected 2018 HSA contribution limits for those with family coverage. The adjusted amount is $6,850, which is $50 less than the original 2018 limit of $6,900. The Employers Council on Flexible Compensation (ECFC) released a summary of the changes affecting HSAs.
HSA contribution limits, minimum deductibles, and the maximum for out-of-pocket expenses all go up next calendar year.
2018 HSA Contribution Limits
Starting January 1, annual maximum HSA contribution limits will rise for both individual and family coverage. Account holders with individual coverage will be able to make maximum HSA contributions of $3,450, a $50 increase from 2017 HSA contribution limits. Those with family coverage may contribute up to $6,850, a $100 increase from 2017.
HSA plans have become increasingly popular among employees who are enrolled in high-deductible health plans (HDHP) because they can make untaxed HSA contributions into an account for medical expenses, reducing their overall tax bill to the IRS. In addition, account holders can roll over unused funds year after year, unlike with Flexible Spending Accounts (FSAs) which have a “use it or lose it” policy. Investing in an HSA could result in a reduction of personal health care costs as time progresses.
Other financial incentives to open an HSA account include earning interest on the funds and being able to invest funds when you meet a mandatory minimum amount.
Minimum Deductible for HDHPs
The IRS also raised the minimum deductible for qualified high deductible health plans (HDHPs). This is the first time since 2015 that the minimum deductible will go up.
In 2018, the individual coverage minimum deductible is $1,350, up $50; the family coverage minimum deductible goes up to $2,700, a $100 increase.
Maximum for Out-of-Pocket Expenses
The maximum limit for out-of-pocket expenses is going up in 2018, as well. The last increase was in 2016.
Next year, those with individual coverage will have a $6,650 limit, a $100 increase. Account holders with family coverage see a $200 increase to $13,300.
Catch Up Contributions
The 2018 HSA catch up contribution limit remains the same, at $1,000, for those 55 years of age and older.
2018 HSA Contribution Limits/Minimum Deductible/Out-of-Pocket Expenses
|HSA Contribution Limits||Individual: $3,400
|Minimum Deductible for HDHPs||Individual: $1,300
|Maximum Out-of-Pocket Expenses||Individual: $6,550
To discover what products and services you can purchase with your HSA contributions, learn more about HSA eligible expenses.
*This post was updated March 7, 2018 to reflect the changes made by the IRS on March 5. The initial publishing date of this article was May 9, 2017. For the initial IRS release from May 2017, see here.