2018 health savings account limits increase slightly

The IRS issued the inflation-adjusted figures for calendar year 2018 for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2017-37).

Under Sec. 223, individuals who participate in a high-deductible health plan (HDHP) are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The contribution deduction limit is subject to an annual inflation adjustment. For 2018, the annual limit on deductible contributions is $3,450 for individuals with self-only coverage (a $50 increase from 2017) and $6,900 for family coverage (a $150 increase from 2017 after not increasing last year).

To be eligible to contribute to an HSA, an individual must participate in an HDHP, which is a health plan with an annual deductible that is not less than a certain limit each year and for which the annual out-of-pocket expenses, including deductibles, co-payments, and other amounts, but excluding premiums, do not exceed a certain limit each year (Sec. 223(c)). These limits are also subject to annual inflation adjustments.

For 2018, the lower limit on the annual deductible under an HDHP is $1,350 for self-only coverage and $2,700 for family coverage, both increased from 2017. The upper limit for out-of-pocket expenses is $6,650 for self-only coverage and $13,300 for family coverage, also both increased from 2017.

—Sally P. Schreiber (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.