The IRS has released the 2018 contribution limits for health savings accounts (HSAs), as well as the requirements for high-deductible health plans (HDHPs), since you can only contribute to an HSA if you have health coverage through an HDHP (Revenue Procedure 2017-37, 2017-21 IRB 1252). An HDHP must have a minimum annual deductible and a limit on out-of-pocket expenses other than premiums. The 2018 amounts are slightly higher than for 2017. The table below shows the year-to-year comparison.

An HSA is an IRA-type of account for medical expenses that can offer multiple tax benefits:

Contributions to the HSA are tax deductible. You don’t have to itemize deductions to take this write-off. You can make contributions up until the due date for filing that year’s return. For 2017 returns, the deadline is April 17, 2018, and for 2018 returns, the deadline is April 15, 2019.

Earnings in the account grow on a tax-deferred basis.

Withdrawals to pay qualified medical expenses for yourself, your spouse, or your dependents are tax free. Withdrawals for any other purpose are permissible, but taxed as ordinary income. If you’re under age 65, the non-qualified withdrawals are also subject to a 20% penalty; there’s no penalty once you reach age 65 regardless of how you use the withdrawals.

Health care reform could expand HSA benefits. The American Health Care Act (AHCA), passed by the House on May 4, would nearly double the deductible HSA contribution limit by making it equal to the HDHP cap on out-of-pocket expenses. The AHCA would also broaden the category of qualified medical expenses that could be paid tax free from an HSA, and reduce the penalty for non-qualifying withdrawals to 10% (from 20%). However, the fate of the AHCA in the Senate is uncertain. Stay tuned for future developments from Congress.


HSA and HDHP RULES for 2017 and 2018








Maximum deductible contribution*

$ 3,400




Minimum HDHP deductible





Cap on out-of-pocket costs (such as deductibles and co-pays but not premiums)





* An additional “catch-up” contribution of $1,000 is allowed if you are age 55 by the end of the year, provided you are not enrolled in Medicare. The $1,000 catch-up amount is set by statute with no annual inflation adjustments. No further HSA contributions (regular or catch-up) can be made starting with the month you enroll in any type of Medicare.