HSA, FSA and Section 125 Limits
The IRS limits employers need for open enrollment: HSA, high deductible health plan, FSA, dependent care, commuter and the ACA affordability percentage, with what is final for 2027 and what is not.
The Numbers for Plan Years Beginning in 2026
Every figure below was read from the IRS source in October 2026. These move each year, so check the IRS before you print them in an enrollment guide.
HSA Contribution Limit
Self-only coverage: $4,400. Family coverage: $8,750 (Rev. Proc. 2025-19, section 2.01).
HSA Catch-Up
An eligible individual age 55 or older at the end of the tax year can contribute an additional $1,000 (IRS Publication 969).
High Deductible Health Plan Minimum Deductible
$1,700 for self-only coverage and $3,400 for family coverage.
High Deductible Health Plan Out-of-Pocket Maximum
$8,500 for self-only coverage and $17,000 for family coverage, premiums excluded.
Health FSA Salary Reduction Limit
$3,400 for plan years beginning in 2026 (IRS Publication 15-B).
Dependent Care Assistance
The exclusion is $7,500, or $3,750 for married employees filing separately (IRS Publication 15-B).
Commuter Benefits
The monthly exclusion for qualified parking is $340, and the same $340 applies to transit passes and commuter highway vehicles.
Adoption Assistance
The exclusion is $17,670 for 2026 (IRS Publication 15-B).
QSEHRA Limits
$6,450 for self-only coverage and $13,100 for family coverage for 2026.
What Is Final for 2027 and What Is Not
Open enrollment for 2027 is happening now, so this is the section most employers need.
HSA Contribution Limit
Self-only coverage: $4,500. Family coverage: $9,000 (Rev. Proc. 2026-24, section 3.01).
High Deductible Health Plan Minimum Deductible
$1,750 for self-only coverage and $3,500 for family coverage for 2027.
High Deductible Health Plan Out-of-Pocket Maximum
$8,700 for self-only coverage and $17,400 for family coverage for 2027, premiums excluded.
Direct Primary Care Fees
Monthly aggregate fees for a direct primary care arrangement may not exceed $150 per individual, or $300 if it covers more than one individual. Employees choosing between plans can test the trade-off with our HDHP vs PPO calculator. To estimate the payroll tax saved by paying premiums before tax, use our Section 125 savings calculator.
ACA Affordability Percentage
10.22% for plan years beginning in 2027 (Rev. Proc. 2026-26). The 2026 percentage is 9.96%.
Health FSA Limit
We could not find a published 2027 health FSA limit from the IRS as of October 2026. Do not print a number until the IRS releases it. Any figure you see today is a projection. To budget an employer HSA contribution, try our free employer HSA contribution calculator.
Rules Employers Get Wrong
The limits are the easy part. These are the points that create errors.
Medicare Ends HSA Eligibility
From the first month of Medicare enrollment, the HSA contribution limit is zero. Retroactive Medicare coverage can turn contributions made during that period into excess contributions. Employees approaching age 65 should be told to coordinate their HSA contributions with their Medicare enrollment date, and a tax adviser can help with timing.
Employer Contribution Comparability
If you contribute to employee HSAs outside a cafeteria plan, contributions must be comparable: the same dollar amount, or the same percentage of the deductible, for comparable participating employees. The comparability rules do not apply to contributions made through a cafeteria plan.
Reporting
Employer HSA contributions are reported on Form W-2, box 12, code W. Payroll should confirm that employer contributions, including any made through a cafeteria plan, are captured in the right box at year end. Reconcile the total against the HSA custodian records before forms are issued, and ask a tax adviser about any difference.
Limits Apply Per Person
The HSA limit is an individual limit. Employer and employee contributions both count against it. Combined contributions from all sources must stay within the annual limit, so watch for employees who change coverage type during the year. Remind employees that they are responsible for tracking contributions to accounts outside payroll.
Section 125 Plan Document
Pre-tax premiums, FSAs and dependent care run through a written cafeteria plan document. Having one is an employer obligation. If the employer does not have a current written document, ask counsel or the plan’s document provider about adopting or updating one, and keep amendments dated and signed with the plan records.
Mid-Year Changes
Election changes in a cafeteria plan are limited to permitted events. Confirm the event before processing a change. Check the plan document to see which events it allows, ask for supporting evidence where the plan requires it, and process changes only within the time the plan permits.
Questions Employers Ask About Limits
What Is the 2027 HSA Limit?
$4,500 for self-only coverage and $9,000 for family coverage, per IRS Rev. Proc. 2026-24.
Is the 2027 Health FSA Limit Out Yet?
Not as of October 2026 from what we could find. Wait for the IRS before publishing a number.
Can Someone on Medicare Contribute to an HSA?
No. The contribution limit is zero from the first month of Medicare enrollment.
What Is the Catch-Up Amount?
$1,000 for an eligible individual age 55 or older at the end of the tax year.
Does the Dependent Care Limit Differ for 2026?
The IRS lists $7,500, or $3,750 for married employees filing separately, for 2026.
Where Do I Report Employer HSA Contributions?
On Form W-2, box 12, code W.
Do the ACA Affordability Rules Use These Numbers?
No. Affordability uses its own percentage: 9.96% for 2026 and 10.22% for 2027.
Is This Tax Advice?
No. This is general information from benefits advisors. Check figures against the IRS and consult your tax advisor.
Is this legal advice?
No. This page is general information, not legal advice. Rules change and facts differ, so confirm your situation with your attorney or tax advisor.
Related Guides
Related reading: Michigan Benefits Compliance Hub · Michigan Compliance Calendar · ACA Affordability Calculator · FSA, HRA and HSA Coordination for Employers · Dependent Care Assistance Programs Under Section 129 · Student Loan Repayment Benefits Under Section 127 · W-2 Box 12 Code DD: Reporting the Cost of Health Coverage · HSA Comparability Rules for Employer Contributions · Excepted Benefit HRAs for Employers · Medicare Enrollment and HSA Contributions · Health FSA Carryover, Grace Period, and Run-Out
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