2027 HSA Contribution, HDHP Cost-Sharing Limits

The IRS has announced slightly higher health savings account contribution limits for 2027, with the limit increasing 2.3% for individual HSA plans.

The IRS updates HSA contribution limits annually, along with minimum deductibles and out-of-pocket maximums for high-deductible health plans. HSAs help employees save for medical expenses and are only available to those enrolled in qualified HDHPs.

Understanding these amounts now can help you get an early start on human resources planning for next year.

Here are the changes coming in 2027:

HSA annual contribution limit

HDHP minimum annual deductible

HDHP annual out-of-pocket maximum

What to do

If you sponsor an HDHP for your staff, review the plan’s minimum deductible and out-of-pocket maximum when preparing for the 2027 plan year.

If you allow employees to make pre-tax contributions to an HSA, you should also update your plan communications to reflect the new amounts.

The many benefits of HSAs

An HSA is a special bank account for your employees’ eligible health care costs. They can contribute to their HSA through pre-tax payroll deductions, deposits or transfers. As the balance grows over time, they can continue to save it or spend it on eligible medical expenses.

Employers can also contribute to the accounts, but the annual contribution limit applies to all employee and employer contributions combined.

The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. If their new employer offers qualified HDHPs, they can continue to fund the account.

Funds roll over from year to year and can earn interest. Many plans also have investment options to help savers grow the account further.

There are several benefits for employees who have an HSA:

• The money an employee contributes to an HSA is not subject to income taxes, which reduces their overall taxable income.
• They are not taxed on withdrawals.
• If employees contribute to their HSA with after-tax money, they can deduct their contributions on Form 1040 at tax time.
• Employees can tap the funds for any approved out-of-pocket medical expenses.
• They can also grow the account tax-free by investing the funds, like a nest egg for medical expenses in retirement.

HSA-eligible expenses

• Payments for services or medicine that count toward health plan deductibles, copayments or coinsurance.
• Dental or vision care, including orthodontics, eye exams and corrective lenses.
• Medical devices.
• Certain over-the-counter medicines, such as pain relievers, allergy medication, cold and flu medicine or menstrual products.
• Vitamins and health supplements, if recommended by a medical or health professional to treat or prevent a specific disease or condition.