Overview: IRS Increases Maximum Back to $6900
*Update* As of April 27, the limit was set back to $6900.
When the IRS reduced the HSA Family Maximum Limit from $6900 to $6850 earlier this year, we designed the HSA Enrollments Over $6,850 report as an audit report to return all employees with HSA Total Yearly contributions over the Family IRS maximum limit of $6850. However, now that the maximum was increased back to $6900, you can still use this report for tracking purposes.
We have divided the report into two main sections:
- Calendar year plans
- Off calendar year plans
To access this report go to a Brokers Home page> click on Reports> under Utilization Reports click on "2018 HSA Enrollments".
Note: An Off Calendar year plan needs additional auditing because ‘Current Employee Yearly’ and ‘Current Employer Yearly’ represent plan year values, as opposed to Calendar year values.
Current Employee/Employer Yearly Amount= Per pay cost x # of pays total
Employee/Employer YTD= Per pay cost x # of pays to date based on the Calendar year
Projected Total Yearly Amount= The EE/ER Yearly + EE/ER Calendar YTD
Note: For Off-calendar year plans and adjustments made mid-year, the EE/ER calendar YTD will be added to the projected total yearly amount.
Please find example cases of when you would see an employee listed on the report:
Calendar Year plan:
James Mitchell works for Hilton’s House Company and enrolled during their 2017 open enrollment season into an HSA effective 1/1/2018 contributing $245 per pay. The company has a Semi-monthly payroll group and has assigned all employees to this group. On James Benefit Summary, his EE yearly amount is $5880. The Employer is also contributing an additional $1,000 a year. This totals a Projected Annual amount of $6880 which is over his $6850 limit. James appears on the HSA Enrollment report to modify his contribution amount.
Off Calendar Plans:
Lisa Torres works for JLL Management Services who has just completed their Open Enrollment for 3/1/2018 plans. She was previously enrolled in the 2017 HSA plan effective 3/1/2017 - 2/28/2018, contributing $200 per pay for 24 pay periods. Since Employee Navigator applies the IRS max limit based on the number of deductions in a Calendar year, the system is doing the following calculation:
- Pay Periods between Jan- Feb 2018 = 4
- Per Pay contribution- $200
- Employee YTD- $800
- Employer YTD- $70
During open enrollment, 3/1/2018, she increases her contribution to $270 per pay. The Employer also contributes $420 annually.
- Current Employee Yearly amount= $6480 ($270 x 24 pays in plan year)
The broker for this account uses the HSA Enrollments over $6850 to audit enrollments after the IRS change. After running the report, Lisa Torres appears on therReport showing a yearly amount over the Max limit. Her Projected Annual amount shows $7770 which is over her $6850 limit.
$6480 + $420 + $800 + $70 = $7770
NOTE: In this scenario, the Employee appears on the HSA Enrollment report indicating she is contributing over, however, the 'Current Employee Yearly’ and ‘Current Employer Yearly’ represent plan year values, as opposed to Calendar year values.
Over Age 55 Catch Up Contribution:
Barbara Washington works for Cater2U Cooking Services. She is 55 years old and is eligible for the additional $1,000 catch-up contribution. After enrolling in EE + family medical coverage effective 1/1/2018, she lands on the HSA page to input her contribution. Her IRS contribution limit is $6850, plus her $1,000 catch up and $409.92 employer contribution.
She is contributing $151.92 per pay (52 payroll cycle). This totals a Project Total of $7900 which is over her $7850 max limit.
To resolve, use the Adjust HSA tool to adjust the Employees contribution amount based on the number of *remaining* pay periods.
For Off calendar year plans please be aware employees may not need to reduce their election, but rather they are a candidate to be over-funded and the election should be reviewed to determine if additional steps are necessary.
When an HSA/HRA/cafeteria plan is set up on an off-cycle plan year, the system is simply taking the remaining pays in the current calendar year and applying the IRS max limit accordingly. This calculation does not take into account that once a new calendar year begins, the enrollment may need to be modified to ensure that the employee is not contributing over the annual max. The employee would need to utilize the 'Change HSA' life event tool to change their per pay contribution accordingly.