The IRS has released the updated limits for Health Savings Accounts (HSAs), High-Deductible Health Plans (HDHPs), Direct Primary Care Service Arrangements (DPCSAs), and Excepted Benefit Health Reimbursement Arrangements (HRAs) for 2027. Employers will want to consider how these updates will be utilized for their 2027 planning and include them in the communications to employees in advance of the 2027 plan year.
Neither healthcare nor dependent care flexible spending account (FSA) limits have been issued. The IRS typically releases adjusted limits later in the fall—we will share those as they are published.
Here is a summary of what is changing and what it means for you and your employees.
| Type of Limit | 2026 | 2027 | Change | |
|---|---|---|---|---|
| HSA Contribution Limit* | Self-only | $4,400 | $4,500 | ▲ $100 |
| Family | $8,750 | $9,000 | ▲ $250 | |
| HSA Catch-up Contributions (age 55+, not inflation-adjusted) | Age 55+ | $1,000 | $1,000 | No change |
| HDHP Minimum Deductible | Self-only | $1,700 | $1,750 | ▲ $50 |
| Family | $3,400 | $3,500 | ▲ $100 | |
| HDHP Maximum Out-of-Pocket Expense Limit (deductibles, copayments, and other amounts, but not premiums) |
Self-only | $8,500 | $8,700 | ▲ $200 |
| Family | $17,000 | $17,400 | ▲ $400 | |
| Direct Primary Care Service Arrangements (DPCSAs) | Self-only | $150 per month | $150 per month | No change |
| Family | $300 per month | $300 per month | No change | |
| Excepted Benefit HRA Limit | Maximum Employer Contribution | $2,200 | $2,250 | ▲ $50 |
* HSA annual contribution limits represent the total maximum allowable contributions from all sources, including both employer and employee contributions.
An HDHP is a health insurance plan that meets minimum out-of-pocket thresholds. Employees must be enrolled in qualifying HDHP coverage to be able to contribute, or have contributions made on their behalf, to an HSA.
An HSA is a tax-advantaged savings account available only to individuals enrolled in a qualifying HDHP. Contributions by the employee are tax-deductible (or pre-tax when made through payroll) and contributions by the employer (or other third party) are not includible in taxable income. The earnings on the account grow tax-free, and withdrawals for qualified medical expenses are excluded from income tax. Unlike a flexible savings account, there is no "use it or lose it" rule: balances roll over indefinitely, and the account belongs to the employee, even if they change jobs or leave your organization.
It is important to note that while HSAs offer significant tax advantages at the federal level, state tax treatment varies. Two states, California and New Jersey, do not recognize HSA contributions as a deduction and treat them as taxable income, and some states will tax any interest or investment gains earned within the account. We recommend employees consult with their own qualified tax advisor to understand how their state treats HSA contributions and earnings.
A DPCSA is an arrangement where an individual pays a flat monthly fee directly to a primary care provider in exchange for enhanced or unlimited access to primary care services, without going through insurance for those visits. It is similar to what some think of as "concierge medical practices." Due to the limits of the law, the DPCSA services will generally be much less comprehensive than those of a traditional concierge practice.
Historically, participating in one of these arrangements could inadvertently disqualify an employee from contributing to an HSA, because the IRS treated it as a form of health coverage. OBBBA changed that by amending IRC § 223(c)(1)(E) to provide that a DPCSA is not treated as a health plan, and therefore does not affect HSA eligibility, as long as the monthly fees stay within IRS-established limits. Therefore, starting in 2026, employees enrolled in an HDHP who also have a direct primary care membership can keep their HSA eligibility intact, provided their monthly fees do not exceed the following thresholds:
The $150 is not an exemption amount that is reduced from fees—it is an all-or-nothing threshold.
|
FEES AT OR BELOW LIMIT |
FEES EXCEED LIMIT |
$150/month or less (individual)The DPCSA is completely disregarded for HSA eligibility purposes. The employee can contribute to their HSA that month as if the DPCSA does not exist. |
More than $150/month (individual)The DPCSA is treated as a health plan. The employee loses HSA eligibility for that month entirely—there is no partial allowance or pro-rated amount. |
Employers offering or considering a DPCSA as part of their benefits package should confirm that any DPCSA fees fall within these limits to preserve employees' HSA eligibility.
An Excepted Benefit HRA is an employer-funded account that can be offered to any employee, regardless of whether they are enrolled in your major medical plan. Most general HRAs are required to be integrated with a general group health plan that provides Affordable Care Act (ACA) minimum coverage. It is a flexible tool that helps employees pay for certain ancillary insurance premiums, without creating the ACA marketplace subsidy complications that come with traditional HRAs.
Eligible expenses are limited to premiums for "excepted benefits"—a category that includes a range of supplemental coverages most employees are already carrying or would benefit from, such as:
Dental insurance (including orthodontia)
Employees do not have to give up their other employer coverage to participate. This is a true add-on benefit; employers fund it, and employees use it to offset costs they are already incurring.
The annual 2027 Excepted Benefit HRA employer contribution is $2,250, regardless of the medical plan tier enrollment.
For calendar-year plans, the updated HSA contribution limits and HDHP cost-sharing thresholds take effect January 1, 2027. Non-calendar-year plans must comply as of their first plan year start date in 2027 (for example, a July 1 renewal must comply by July 1, 2027). Employers should use the months leading up to open enrollment to update all employee-facing materials (benefit guides, enrollment portals, and Summary Plan Descriptions) with the new limits, and brief HR and benefits staff so they can field employee questions accurately. Employees age 55 and older should be reminded of their continued eligibility for the $1,000 catch-up contribution.
On the plan design and administration side, employers should confirm that their HDHP still qualifies under the 2027 thresholds and work with their payroll provider and Third-Party Administrator (TPA) or HSA custodian to update contribution caps before the first payroll of the new plan year. Over-contributions can result in tax liability and corrective distributions for employees, so getting payroll systems updated early is essential. Employers offering an excepted benefit HRA should also update their plan documents to reflect the new $2,250 maximum.
Finally, employers offering or considering a Direct Primary Care Service Arrangement (DPCSA) should verify that monthly fees remain within the 2027 thresholds ($150 for single-individual arrangements, $300 for arrangements covering more than one individual) to preserve employee HSA eligibility.
This Compliance Alert is provided for information purposes only and does not constitute legal, tax, or benefits advice. Employers and readers should consult with qualified legal counsel regarding their specific circumstances. Source: IRS Revenue Procedure 2026-24 (May 29, 2026).