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2018 HSA Contribution Limits
The Internal Revenue Service recently announced the 2018 inflation-adjusted contribution limits for health savings accounts, also known as HSAs. HSAs are tax-advantaged savings accounts usually held at a bank or other financial institution. When combined with a qualified high-deductible health plan (HDHP), HSAs are a good way to help pay for future medical expenses.

Each year, the IRS adjusts the contribution amounts to keep pace with inflation. When compared to the 2017 limits, the 2018 HSA contribution limits for individual coverage increased $50, and $150 for family coverage. Furthermore, the HDHP minimum deductible and the HDHP maximum out-of-pocket also increased. Lastly, catch-up contributions for individuals 55 remained the same at $1,000.

The table below illustrates the 2018 HSA contribution limits:

2018 HSA Contribution Limits

Contribution Limits$3,450$6,900
HDHP Minimum Deductible$1,350$2,700
HDHP Out-of-Pocket Maximum*$6,650$13,300
Catch Up Contribution (Age 55+)$1,000
*Includes deductibles, copayments, and other amounts, but not premiums.
For more detailed information, refer to the IRS 2018 HSA Guidance document for more details.


A key feature of HSAs is their portability. Portability, by definition, is a U.S. employee’s right to keep or maintain certain benefits when switching employers or when leaving the workforce (retiring). Therefore, if you change employers or leave the workforce, you can still keep your HSA. Equally important, funds left over at the end of the year are carried over to the following year. In contrast, a Flexible Spending Account (FSA), you forfeit any money not used within the plan year.

Taxes & Penalties

If you withdraw money from your HSA to pay for non-qualified medical expenses, the amount will be subject to a penalty of 20% in addition to ordinary income tax. However, if the money is used for qualified medical expenses, then the withdrawals are tax free. UPDATE: The American Health Care Act, healthcare reform bill that just passed the House, would cut the penalty back to the pre-Obamacare amount of 10%. Also worth noting, the bill will reestablish the right to pay for over-the counter-medications without a prescription using your health savings account.

Additional HSA Benefits / Information

  • The interest or other earnings on the assets in the account are tax free.
  • You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.
  • HSA contributions for the 2018 tax year may be made until April 15, 2019.

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