The contribution limits for various tax advantaged accounts for the following year are usually announced in October, except for HSA, which come out in April or May. The recent tax law also changed how the limits adjust for inflation. When the IRS re-calculated off the chained CPI, they had to lower the previously calculated limit for family coverage by $50, but now they allow you to treat the 2018 limit for family coverage as either $6,900 or $6,850.
I was able to calculate the limits using the same method stipulated by law before the IRS published the official numbers. My own calculations matched 100% the official numbers from the IRS.
HSA Contribution Limits
|Family Coverage||$6,750||$6,850 or $6,900||$7,000|
Employer contributions are included in these limits.
Age 55 Catch Up Contribution
As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of year, you can contribute additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute additional $1,000.
However, because HSA is in an individual’s name — there is no joint HSA even when you have family coverage — only the person age 55 or older can contribute the additional $1,000 in his or her own name. If only the husband is 55 or older and the wife contributes the full family contribution limit to the HSA in her name, the husband has to open a separate account for the additional $1,000. If both husband and wife are age 55 or older, they must have two HSA accounts if they want to contribute the maximum. There’s no way to hit the maximum with only one account.
The $1,000 additional contribution limit is fixed by law. It’s not adjusted for inflation.
Two Plans Or Mid-Year Changes
The limits are more complicated if you are married and the two of you are on different health plans. It’s also more complicated when your health insurance changes mid-year. The insurance change could be due to a job change, marriage or divorce, enrolling in Medicare, birth of a child, and so on.
For those situations, please read HSA Contribution Limit For Two Plans Or Mid-Year Changes.
You can only contribute to an HSA if you have a High Deductible Health Plan (HDHP). You can use the money already in the HSA for qualified medical expenses regardless what insurance you have.
The IRS also defines what qualifies as an HDHP. For 2018, an HDHP with individual coverage must have at least $1,350 in annual deductible and no more than $6,650 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,700 in annual deductible and no more than $13,300 in annual out-of-pocket expenses.
For 2019, an HDHP with individual coverage must have at least $1,350 in annual deductible and no more than $6,750 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,700 in annual deductible and no more than $13,500 in annual out-of-pocket expenses.
Please note the deductible number is a minimum while the out-of-pocket number is a maximum. If the out-of-pocket limit of your insurance policy is higher, it doesn’t qualify as an HSA-eligible policy.
In addition, just having the minimum deductible and the maximum out-of-pocket isn’t sufficient to make a plan qualify as as HSA-eligible. The plan must also meet other criteria. See Not All High Deductible Plans Are HSA Eligible.
Best HSA Providers
If you get the HSA-eligible high deductible plan through an employer, your employer usually has a designated HSA provider for contributing via payroll deduction. It’s best to use that one because your contributions via payroll deduction are usually exempt from Social Security and Medicare taxes. If you want better investment options you can transfer or rollover the HSA money from your employer’s designated provider to a provider of your choice afterwards. See How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee.
If you are not going through an employer, or if you’d like to contribute on your own, you can also open an HSA with a provider of your choice. For the best HSA providers with low fees and good investment options, see Best HSA Provider for Investing HSA Money.
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