Special Alert: The IRS Increases the Annual Contribution Limits to HSAs and Deductible Contributions for 2018
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Many individuals choose to participate in a high-deductible health plan (HDHP) offered by either their company or on the healthcare exchange to save money on insurance premiums. Most are associated with a health savings account (HSA) so the participant can contribute pre-tax dollars to cover some of their out-of-pocket expenses including deductibles, co-payments, and prescription drugs, to name a few. Insurance premiums are excluded as an allowable out-of-pocket expense.

The IRS limits the amount that a person can contribute to a HSA on an annual basis. Yet, the IRS allows participants to take a deduction for contributions made to a HSA that is set-up to help pay for their medical expenses. Both are adjusted annually for inflation. 

For 2018, the lower limit annual deductible under a HDHP has increased to $1,350 for self-coverage and $2,700 for family coverage. The upper limit for out-of-pocket expenses has also increased to $6,650 for self-coverage and $13,300 for family coverage.

The annual deduction limit for 2018 is $3,450 for individuals with self-coverage and $6,900 for family coverage. This is a slight increase of $50 and $150 respectively from the 2017 annual limit.

Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code.  We strongly advise you to seek professional assistance with respect to your specific issue(s).  

Martin C. McCarthy, CPA
Managing Partner
McCarthy & Company, PC