IRS Revises Inflation Adjusted Benefit Plan Limits in Bulletin 2018-10
Bulletin 2018-10 reveals that the maximum HSA contribution for an individual with family coverage in a High Deductible Health Plan (HDHP) has been reduced from $6,900 to $6,850. In late 2017, experts initially forecasted a $6,900 limit based on inflation. However, the new limit has been reduced even further. The maximum contribution for an individual with single coverage remains unchanged at $3,450.
Individuals with family coverage should adjust their contribution elections for 2018 to ensure they do not exceed the new $6,850 limit. Excess contributions that are not withdrawn by April 15, 2019, will be subject to an excise tax of 6%.
Transition Relief from the IRS for Maryland HSAs
Maryland employers sponsoring HSAs can breathe a sigh of relief regarding this news. The IRS issued Notice 2018-12 to clarify their position on how male sterilization and male contraceptives are treated for purposes of the deductible in HDHPs, with the associated transition relief.
Maryland’s new insurance mandate, effective January 1, 2018, requiring male sterilization/contraceptives to be covered at 100%, irrespective of the deductible, created a disconnect with the IRS rules defining qualified coverage in HDHPs and therefore making it eligible to contribute to an HSA. To put it in simpler terms, the IRS requires that only preventative care be paid for prior to the deductible and male sterilization/contraceptives do not fit this definition. As a result, any contributions to HSAs of Maryland sponsored HDHPs would not receive favorable tax treatment.
The IRS confirmed male sterilization/contraceptives are not considered qualifying coverage. However, the agency granted transition relief until December 31, 2019, allowing contributions to affected HSAs to continue to receive favorable tax treatment for the time being.
For more information or questions regarding the IRS’ new limits, please contact Aronson’s Compensation & Benefits specialists at 301.231.6200.