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R&R Insurance Blog

IRS Sets 2018 HSA/HDHP Limits

Posted by Shay Sherfinski

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On May 5, 2017, the Internal Revenue Service (IRS) released Revenue Procedure 2017-37 to announce the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2018. The IRS limits for HSA contributions and HDHP cost-sharing will all increase for 2018. These limits include:

  • Contribution limits for individuals rising to $3,450 (from $3,400 in 2017) and limits for family coverage rising to $6,900 (from $6,700 in 2017)
  • Max out of pocket figures – Single: $6,650 (up from $6,550 in 2017) and Family: $13,300 (up from $13,100 in 2017)

These limits vary based on whether an individual has self-only or family coverage under an HDHP.

The triple-tax-advantaged HSAs can provide account owners with benefits beyond savings to pay for health expenses. Reminder deposits into an HSA are tax free and contributions grow in the account tax free. Distributions are also tax free as long as the money is used for out-of-pocket health care expenses, including deductibles.

If the money is withdrawn before the account owner turns 65 and gets spent on something other than an eligible expense for health care, it is both penalized at a rate of 20 percent and taxed.

While those 55 and older can contribute an extra $1,000 as a catch-up contribution, it can only be made in the name of the person who is 55 or older; HSAs are not joint accounts. Therefore, even for family plan, a spouse younger than 55 cannot make that catch-up contribution in their own name.

The HSA contribution limits will increase effective January 1, 2018, while the HDHP limits will increase effective for plan years beginning on or after January 1, 2018.

Do not hesitate to reach out to Shay Sherfinski with any questions regarding these changes or for more information. 

Topics: health savings account, Healthcare

HRA: Flexibility For Employers

Posted by Jane Shevey

health money bagIn a time when employers are more budget conscious than ever, an HRA seems like a viable option. Given that HRAs come with few requirements, they provide a great deal more flexibility to employers than HSAs.

Because HRA funds do not belong to an employee, the employer retains any remaining HRA funds when an employee leaves the organization. Companies with high turnover find this to be a very favorable option.

Many employers find an HRA easier to manage. Because the employer is putting money in to the HRA, they are able to determine rules for the benefit plan. An employer has the flexibility to design a plan with a deductible that is not as high as you might see with an HSA-compatible plan. For example, if an employer wants to encourage employees to utilize high-value health care centers or have particular types of care covered at 100%, HRAs allow them to do so.

Wisconsin employers, contact a knowledgebroker to see if an HRA is right for your company.

Topics: Employee Benefits, health savings account, hra vs hsa, health reimbursement account, HRA, HSA