The “Tax Reform” bill that was passed in late 2017 changed the method the IRS uses to calculate cost of living increases from the Consumer Price Index (CPI) to the Chained CPI method. The Chained CPI calculation takes into consideration the fact that some consumers will choose lower priced products or substitute products as costs increase.
This change prompted the IRS to recalculate the 2018 maximum family contribution for a Health Savings Account. On March 5, 2018 the IRS announced that they have reduced the 2018 maximum family contribution limit from $6,900 to $6,850 effective immediately.
Any 2018 family contribution to an Health Savings Account exceeding $6,850 may be subject to taxes and penalties. Employees contributing to an HSA should be informed of the change, and adjustments in contributions for 2018 should be made if needed. Employees who have already contributed the maximum amount for 2018 may be issued a refund of the excess contribution.
Wilshire Benefits is working closely with our vendors as they evaluate the impact of this change. As part of our commitment to you, we will keep you up to date with information as we receive it. In the meantime, do not hesitate to contact us with questions.
For additional information, see the IRS Bulletin No. 2018-10.