New Tax Law Results in Lower Limits for HSAs, Adoption Assistance Programs
Yesterday the IRS released Bulletin 2018-10, which included revised, inflation-adjusted amounts that affect health savings accounts (HSAs) and adoption assistance programs. Specifically:
- The maximum family contribution to an HSA has been reduced from $6900 to $6850
- The maximum amount that can be excluded from gross income for adoption expenses has been reduced from $13,840 to $13,810 per child.
These changes are a result of a shift under tax reform law (P.L. 115-97) in how certain dollar amounts are indexed—from the Consumer Price Index for All Urban Consumers (CPI-U) to the Chained Consumer Price Index for All Urban Consumers (aka, C-CPI-U).
Many employers may have already communicated these limits in their 2018 SPDs, last year’s enrollment materials, and other benefits communications. While the HSA change likely does not merit issuing a summary of material modifications (SMM), these changes may each require a change to internal policies and/or administrative procedures, and organizations may want to alert any employees who may be affected.
For more information, see https://www.irs.gov/pub/irs-irbs/irb18-10.pdf.