IRS Changes HSA thresholds for 2008
June 11, 2007
In May, the IRS posted Revenue Procedure 2007-36, which adjusts three major amounts for administration of Health Savings Accounts (HSAs) and high-deductible health plans (HDHPs) in 2008. These limits, based on cost-of-living adjustments, are as follows:
HSA contribution limits:
- HSA participants with single coverage under a HDHP may contribute $2,900 to their HSAs, increased from $2,850 in 2007
- The HSA family coverage limit is $5,800, up from the 2007 amount of $5,650
Out-of-pocket spending maximums for HDHPs:
- The maximum annual out-of-pocket amount for HDHP self-coverage increases to $5,600 from the 2007 amount of $5,500
- The maximum annual out-of-pocket amount for HDHP family coverage increases to $11,200 from the 2007 amount of $11,000
Minimum HDHP annual deductibles:
- Single coverage is $1,100
- Family coverage is $2,200. Family coverage includes any coverage variation other than single coverage (e.g., employee-spouse, employee-dependent)
In prior years, the IRS announced these changes in mid-November. This left little time for insurance agents and employers to finalize plan designs for health plans that have a calendar year. The Tax Relief and Health Care Act of 2006 now mandates that those amounts must be announced no later than June 1.
As a reminder, the catch-up contribution limit for individuals age 55 or older will increase from $800 to $900 in 2008.
For those employers with HDHPs that have non-calendar plan years, you may use the thresholds that are in effect as of the first day of the plan year. Thus, a plan year that starts on July 1, 2007, may use the 2007 thresholds.
A copy of the Revenue Procedure is available at: www.infinisource.net/Infinisource/Benefit_Resources/docs/IRS_revenue_proc.pdf.