Now that the IRS has announced the 2018 limits for HSA-qualifying HDHP coverage, does a non-calendar year HDHP need to make changes on Jan. 1, 2018, or can it wait until the plan renews in 2018?

The IRS recently announced the 2018 inflation-adjusted amounts relating to HSA contributions and HSA-qualifying HDHPs, including the statutory minimum deductible and the maximum out-of-pocket limits. The HSA rules state that for HDHPs with non-calendar year plans, the adjusted limits for the calendar year in which the HDHP’s plan year begins may be applied for that entire plan year. So, while a calendar-year HDHP plan would need to adopt the new 2018 deductible/out-of-pocket amounts on Jan. 1, 2018, a non-calendar year HDHP plan could wait until the renewal in 2018 to adopt those updated amounts. For example, a HDHP plan year that begins on July 1, 2017, would not need to be updated with the 2018 numbers until the plan year that begins on July 1, 2018.

As for HSA pre-tax elections, the normal restrictions that apply to other pre-tax elections through IRC Section 125 (such as the irrevocable election rule for major medical or health FSA coverage) do not apply to employee HSA contributions. So, employers may allow employees to change their pre-tax HSA elections at any time (so long as the change is prospective). The related rules actually require the employer to allow employees to change their HSA elections at least monthly. For administrative simplicity, most employers stick to that monthly minimum and restrict additional changes within the month.