In Rev. Proc. 2018-30, the IRS released the inflation adjusted amounts for 2019 relevant to HSAs and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.
|Annual HSA Contribution Limit
(employer and employee)
|Self-only: $3,500 Family: $7,000||Self-only: $3,450 Family: $6,900*||Self-only: +$50 Family: +$100|
|HSA catch-up contributions
(age 55 or older)
|Minimum Annual HDHP Deductible||Self-only: $1,350 Family: $2,700||Self-only: $1,350 Family: $2,700||No change|
|Maximum Out-of-Pocket for HDHP
(deductibles, co-payment & other amounts except premiums)
|Self-only: $6,750 Family: $13,500||Self-only: $6,650 Family: $13,300||Self-only: +$100 Family: +$200|
* After reducing the cap $50 in Rev. Proc. 2018-18 in March 2018 due to changes made by the Tax Cuts and Jobs Act, the IRS granted relief in Rev. Proc. 2018-27, restoring the limit back to the original 2018 level. We do not anticipate that the 2019 HSA annual family contribution limit will change as it did for this year.
Out-of-Pocket Limits Applicable to Non-Grandfathered Plans
The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2019.
|ACA Maximum Out-of-Pocket||Self-only: $7,900
Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage, if the family out-of-pocket limit is above $7,900 (2019 plan years) or $7,350 (2018 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). A one-year extension of transition relief was recently announced extending the transition relief to policy years beginning on or before October 1, 2019, provided that all policies end by December 31, 2019.
Next Steps for Employers
As employers prepare for the 2019 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:
- HDHPs cannot have an embedded family deductible that is lower than the minimum HDHP family deductible of $2,700.
- The out-of-pocket maximum for family coverage for an HDHP cannot be higher than $13,500.
- All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $7,900 for any covered person. A family plan with an out-of-pocket maximum in excess of $7,900 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $7,900. This means that for the 2019 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $6,750 (self-only)/$13,500 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $7,900 (so that it is also ACA-compliant).
A Note from Danielle Capilla, Alera Group’s Director of Compliance – Employee Benefits
The IRS increases are in line with those we have seen over the past few years, with modest increases to the annual HSA contribution limits for both single and family coverage, as well as slightly larger jumps in the maximum out of pockets for HDHP plans.
Unfortunately, the maximum out of pocket limits under the separate ACA regulations remain divergent from the HDHP limits, creating an additional compliance concern for employers with high deductible health plans with family maximums above $7,900.
Employers who have HDHP plans with family out of pocket maximums above $7,900 and up to the HDHP limit of $13,500 should ensure that they have an embedded maximum for individuals at $7,900 to ensure compliance with both limits.
The IRS has also indicated that unlike 2018, they do not anticipate any changes in the 2019 HSA contribution levels, so employers should feel comfortable moving forward with setting their contribution strategies for 2019.