Under the new Tax Reform law the annual inflation adjustment factor is changed from the Consumer Price Index, also known as CPI to a new factor called “Chained CPI”. This change to the law affects certain employee benefit contribution limits and are reflected in the IRS Revenue Procedure 2018-10 that was released on March 5, 2018.
REVISED BENEFIT LIMITS
The new benefit limits listed below are effective beginning in 2018.
Health Savings Accounts (HSA)
The family contribution limit for 2018 HSA has been decreased to $6,850 from $6,900. The single contribution limit will remain unchanged at $3,450. The HSA out-of-pocket limits and high deductible limits will also remain unchanged.
The adoption credit amount allowed for the adoption of special needs child adoptions is decreased to $13,810 from $13,840.
Medical Savings Accounts (MSA)
Self-only coverage with an annual deductible limit remains at $2,300 and the outer limit remains at $3,450, however, the annual limit out-of-pocket expenses required to be paid (other than for premiums) are decreased to $4,550 from $4,600.
Family coverage with an annual deductible limit is decreased to $4,550 from $4,600 but the outer limits remains unchanged at $6,850, the annual limit out-of-pocket expenses required to be paid (other than for premiums) remains unchanged at $8,400.
Please refer to the FAQ document here to answer common questions about HSA Excess Contributions.
Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.