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HSA Family Contribution Reverted To $6,900

(April 26, 2018) The Internal Revenue Service has announced that the maximum contribution amount for HSA owners with family coverage under a High Deductible Health Plan (HDHP) has been restored to $6,900 (or, for those eligible for catch-up contributions to $7,900) for 2018. The IRS communicated this change in News Release IR-2018-107 and Revenue Procedure 2018-27.

On March 2, 2018, the IRS and the Treasury Department released Revenue Procedure 2018-18 to announce that the maximum 2018 HSA contribution for an individual with family coverage under a HDHP had been reduced from $6,900 to $6,850 (or, for those eligible for catch-up contributions, from $7,900 to $7,850). Revenue Procedure 2018-18 that superseded the 2018 HSA family contribution limit previously published by the IRS in Revenue Procedure 2017-37 was the result of a provision in the Tax Cuts and Jobs Act of 2017 (enacted on December 22, 2017) that caused cost-of-living adjustments (COLAs) to rise more slowly beginning January 1, 2018.

Following the issuance of Revenue Procedure 2018-18, the IRS and the Treasury Department received feedback from various stakeholders that implementing the $50 reduction would impose numerous administrative and financial burdens. It is in response to these stakeholder concerns that the IRS and the Treasury Department have now restored the maximum contribution for 2018 for HSA owners with family coverage under a HDHP to $6,900 (or, for those eligible for catch-up contributions to $7,900).

HSA owners who removed an excess HSA contribution (with earnings) based on the $6,850 maximum contribution amount published in Revenue Procedure 2018-18 can respond in one of two ways.

• HSA owners may repay the distribution to the HSA as a return of a mistaken distribution. The return of a mistaken distribution (the contribution) to the HSA is not a reportable transaction on IRS Form 5498-SA. As well, the original distribution that was returned is also not reported to the IRS. As a result, financial organizations receiving the returned mistaken distribution must correct their system so that Form 1099-SA is not generated to report the transaction. 

• Alternatively, HSA owners may leave the distribution “as is” as a removal of an excess contribution returned before the due date of return. It is important to note, however, that any employer contributions removed as an excess contribution based on the $6,850 limit must be treated as either a qualified or nonqualified distribution if the employer does not include the contribution in the employee’s wages because the employer treats the full $6,900 as an HSA contribution.