A health savings account (HSA) is a tax-advantaged savings account paired with a qualified high-deductible health plan (HDHP). HSAs have an annual contribution limit, which is adjusted every year by the IRS. The IRS also adjusts the definition of HDHPs annually.
This article outlines the HSA contribution limits and HDHP guidelines for 2018.
HSA contribution limits for 2018
The IRS released the 2018 HSA guidelines through Revenue Procedure 2017-37 on May 4, 2017.
For tax years beginning in 2018, the following annual limits apply to HSA contributions.
|HSA contribution limit
(company + employee)
|HSA catch-up contributions
These contribution limits are determined on a calendar basis, which means contribution limits are prorated by the number of months individuals are HSA eligible. For example, individuals with self-only coverage who are HSA eligible for six months during the 2018 tax year can contribute up to $1,725.
As long as individuals are HSA eligible, contributions can be made at any point during the 2018 tax year, including up through the individual's federal tax return due date.
HDHP guidelines for 2018
To open or contribute to an HSA, individuals must be covered by an HSA-eligible HDHP. HDHP qualification guidelines change every year according to deductible and out-of-pocket amounts.
According to IRS guidelines, health policies must reflect the following features to be considered an HDHP.
|HDHP minimum deductible||$1,350||$2,700|
|HDHP maximum out-of-pocket amount||$6,650||$13,300|
Not all HDHPs are HSA eligible, however. Besides meeting these deductible and out-of-pocket requirements, a policy must not offer any benefit beyond preventive care before the annual deductible is met.
How the new limits and guidelines compare with 2017 limits
2018 HSA contribution limits rose by $50 for individuals with self-only coverage and by $150 for individuals with family coverage, compared with 2017 limits.
Minimum deductibles and maximum out-of-pocket amounts also rose, by $50 and $100 for individuals with self-only coverage, respectively, and by $100 and $200 for individuals with family coverage, respectively.
Here's a chart to compare HSA contribution limits and HDHP guidelines for 2017 and 2018.
|HSA contribution limit||Self-only: $3,450
|HSA catch-up contributions||$1,000||$1,000||No change|
|HDHP minimum deductibles||Self-only: $1,350
|HDHP maximum out-of-pocket amounts||Self-only: $6,650
Additional resources to understand HSAs and personalized benefits
HSAs are an important savings tool, and small businesses can contribute toward their employees' HSAs as a benefit.
HSAs work especially well in a personalized benefits program. With personalized benefits, small businesses give employees tax-free money to spend on the consumer services they want most. A personalized benefits model can be used to offer a variety of benefits, including health, cell phone, education, transportation, retirement, and discounts.
Here are additional resources to learn more about HSAs and other personalized benefits.
- A Guide to Health Savings Accounts
- Health Savings Accounts (HSAs): 10 FAQs
- Why You Should Offer an HSA with Your Small Business HRA
- HSA vs. HRA vs. FSA Comparison Chart
- Personalized Benefits: A New Way to Hire and Keep People