IRS Releases Two New Bulletins That Will Impact Plan Design for 2018

IRS Releases Two New Bulletins That Will Impact Plan Design for 2018

  • On May 12, 2017

The Internal Revenue Service (IRS) has released two new bulletins that will help shape employer health plan contributions and plan designs for the year ahead.   One establishes the contribution limits, minimum deductibles, and maximum for out-of-pocket expense limits for qualified high deductible health plans (HDHPs) and health savings accounts (HSAs) for calendar year 2018. Individuals with self-only HDHP coverage may fund their HSAs with up to $3450 of individual and/or employer contributions.  The limit for families covered by a HDHP will be $6,900 in individual/employer total contributions.  The additional catch-up contribution limit for people who are 55 and older will continue to be $1000 in 2018.  The 2018 deductible limits for HDHPs to be HSA-qualified is $1350 or higher for self-only coverage and $2700 or more for family coverage.  The 2018 out-of-pocket limit for a qualified HDHP plan is $6650 for self-only coverage and $13,300 for family coverage.

The other notice establishes the maximum percentage of an individual’s income that the IRS will use to test to see if a taxpayer had available affordable employer-sponsored minimum essential coverage in 2018.   The employee’s cost for minimum essential coverage must not exceed 9.56% of the taxpayer’s household income in 2018, which is a significant drop from 9.69% in 2017.  Accordingly, the percentage of income applicable large employers will able to use when calculating their affordability safe harbors for 2018 will also fall to 9.56%.  This drop in the affordability calculation percentage is important for large employers to consider when determining how much their plan will contribute to employee premium costs for the 2018 plan year.