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IRS Announces 2018 HDHP Deductible, Out-of-Pocket Limits


IRS Announces 2018 HDHP Deductible, Out-of-Pocket Limits

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As is the case every spring, the Internal Revenue Service (IRS) has released its guidance regarding the limitations for high deductible health plans (HDHP) for the coming calendar year. Rev. Proc. 2017-37 announces the limits that will apply to any HDHP used with a health savings account (HSA) in connection with any plan year beginning in 2018.

To qualify as a HDHP in 2018, the deductible for an individual who has self-only coverage cannot be less than $1,350 (increased from last year’s limit of $1,300) or, for someone with family coverage, the deductible cannot be less than $2,700 (up from last year’s limit of $2,600).

Many plan sponsors have preferred not to use the "self-only/family-only" deductible structure for their HDHP, and instead have adopted an “embedded deductible” in accordance with IRS guidance. This allows for an individual deductible that applies to each family member, with an overall accumulative family limit, such as those used by more traditional health plans. In order to do this in an HDHP, the individual deductible must not be less than the minimum family deductible ($2,700) allowed for that plan year. Any health plan currently using the $2,600 individual embedded deductible must be amended by the beginning of the new plan year to reflect this new limit.

If a plan is using the self-only/family-only deductible structure, the deductibles may also need to increase to reflect the new limits. If you have a non-calendar year plan year, but run your deductible and out-of-pocket limits on the calendar year, you may want to consider making this change to be effective January 1st so that the deductible increase will not occur mid-year.

The HDHP maximum out-of-pocket limits also increased for 2018 to $6,650 (up from $6,550) for someone with self-only coverage and $13,300 (up from $13,100) for family coverage. This is generally less than the out-of-pocket limits that are prescribed for other health plans under the Affordable Care Act (ACA) – those limits have not yet been issued for 2018 plan years. However, the ACA rules now require that, even if an HDHP is using a “family-only” out-of-pocket limit (which would apply out-of-pocket expenses for all family members towards the same maximum limit of $13,300 before it would be considered satisfied), the plan must also include a maximum per individual out-of-pocket limit that does not exceed the ACA individual limit for the year. For example, this might be structured, as follows:

Per Participant with Self-Only Coverage : $6,650
Per Participant with Family Coverage Per Individual: $7,150 (assuming the limit does not change)
Per Family Limit: $13,300

This type of structure would only be required if the HDHP is using the self-only/family-only structure in connection with the out-of-pocket limits. Otherwise, the HDHP will be in compliance using the $6,650/$13,300 limits for individual and family out-of-pocket limits.

This IRS notice also includes the maximum contribution limits for HSAs in 2018. MedBen clients with questions may contact their group service representative or Director of Compliance Annette McNair at or (800) 423-3151, ext. 410.

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