The Tax Cuts and Jobs Act legislated that cost of living increases must use a Chained Consumer Price Index (CPI) to determine inflation adjustments like the HSA/FSA maximums.
This new method caused a recalculation on a number of cost of living increases for calendar year 2018.
On March 5, 2018, the IRS released changes effective this calendar year that need action.
The changes are as follows:
- The family HSA contribution for 2018 is reduced from $6,900 to $6,850.
- The maximum amount excluded from an employee’s gross income for qualified adoption expenses is reduced from $13,840 to $13,810.
- FSA maximums remain unchanged.
Actions Needed for Employers offering an HSA or Adoption Assistance Program
- Employees (enrolled in HSA family coverage) need to be informed of the new reduced family limit for HSAs so adjustments can be made, if applicable.
- Employees who have already contributed the HSA family maximum amount for 2018 will need to receive a refund of the excess contribution.
- Repeat above if your company offers a qualified adoption assistance program.
If you have any questions, please contact me.
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