NEWSROOM

The Internal Revenue Service (IRS) has announced cost-of-living adjustments for Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs) for 2027. An HSA allows individuals to save on a pre-tax basis (or take a deduction when filing a tax return) for qualified medical expenses. Annually, the IRS sets the contribution maximum, which includes both employee contributions and employer contributions.

The maximum contribution is determined by the coverage selected – self-only coverage or family coverage – and whether an employee is age 55 or older. Older employees are permitted a catch-up contribution of $1,000.

The charts below summarize 2026 and 2027 self-only and family coverage limits:

Eligibility

To contribute to an HSA, an employee must not be enrolled in a health plan that is not HSA eligible, nor can they have a general-purpose health care Flexible Spending Account (FSA). They cannot be enrolled in Medicare. Nor can they be claimed as a dependent on someone else’s tax return. If an employee is not enrolled in an eligible HDHP for the full plan year, they can only contribute a portion of the allowable amount. However, if employees are covered on December 1 of a given year, they may be able to able to contribute the maximum amount under the IRS “last-month-rule.” For additional guidance, we recommend a discussion with a tax professional

Potential HSA Tax Penalties

If an employee contributes too much to an HSA, or the combined employee and employer contributions exceed the maximum, an excise tax may apply. Use of funds for ineligible expenses before age 65 could also subject an employee to penalties.