30 April 2018 IRS to allow higher 2018 health savings account contribution limit for family coverage In Revenue Procedure 2018-27, the IRS announced that the limit on annual contributions for individuals with family coverage in a health savings account (HSA) may be treated as $6,900, rather than the $6,850 announced earlier this year in Revenue Procedure 2018-18. The limit of $6,900 was originally announced in Revenue Procedure 2017-37 prior to enactment of the Tax Cuts and Jobs Act (TCJA). The TCJA, enacted on December 22, 2017, modified the inflation adjustment for HSAs. Thereafter, in Revenue Procedure 2018-18, released on March 2, 2018, the HSA family contribution limit was lowered to $6,850, based on the recalculation of the limit under the modified inflation adjustment. No other changes are made to the inflation adjustments announced in March 2018 in Revenue Procedure 2018-18. As a result of the TCJA, the IRS has updated the 2018 annual limits that apply to certain fringe benefits and the penalties that apply to Forms W-2 /1099 that are late or incorrect. (Revenue Procedure 2018-18 is printed in IRB 2018-10, 3-5-2018.) Various dollar amounts in the Internal Revenue Code are adjusted for inflation to maintain the Internal Revenue Code's alignment with current pricing. Prior to January 1, 2018, many of these inflation adjustments were based on annual changes in the level of the Consumer Price Index for All Urban Consumers (CPI-U) that measures prices paid by typical urban consumers on a broad range of products, and is developed and published by the U.S. Department of Labor. Effective January 1, 2018, the TCJA requires the use of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) to adjust certain tax provisions that were previously indexed by the CPI-U. The C-CPI-U, like the CPI-U, is a measure of the average change over time in prices paid by urban consumers. It too is developed and published by the U.S. Department of Labor, but differs from the CPI-U in accounting for the ability of individuals to alter their consumption patterns in response to relative price changes. The C-CPI-U accomplishes this by allowing for consumer substitution between item categories in the market basket of consumer goods and services that make up the index, while the CPI-U only allows for modest substitution within item categories. (TCJA Section 11002.)
Document ID: 2018-0919 | ||||||||||||||
