The Internal Revenue Service (IRS) released the final cost of living adjustments for 2018, including several that affect employee benefit plans. Here are a few of the most pertinent changes:
- The limit for health Flexible Spending Accounts (FSAs) increased to $2,650 for 2018;
- Sect 132(f) vanpool/transit passes and Sect 132(f) qualified parking plans increased to $260.
- The key employee compensation threshold and highly compensated employee threshold numbers both remained the same.
- As announced in May 2017, the inflation adjustments for health savings accounts (HSAs) for 2018 were provided by the IRS in Rev. Proc. 2017-37.
Annual contribution limitation.
For calendar year 2018, the limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the limitation on deductions for an individual with family coverage under a high deductible health plan is $6,900.
High deductible health plan.
For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.
Non-calendar year plans: In cases where the HDHP renewal date is after the beginning of the calendar year, any required changes to the annual deductible or out-of-pocket maximum may be implemented as of the next renewal date. See IRS Notice 2004-50, 2004-33 I.R.B. 196, Q/A-86 (Aug.16, 2004).
Individuals who are age 55 or older and covered by a qualified high deductible health plan may make additional catch-up contributions each year until they enroll in Medicare. The additional contribution, as outlined in Code 223(b)(3)(B), is $1,000 for 2009 and thereafter.
 Note, out-of-pocket maximum limits for high deductible health plans are generally below the applicable requirements for all non-grandfathered health plans.