Legal Alert: IRS Releases 2027 HSA Contribution Limits and Other Limits

Employers that are beginning to plan for the 2027 plan year now have the key thresholds needed to set plan design details and can move forward with confidence.

In Rev. Proc. 2026-24, the IRS released the inflation adjusted amounts for 2027 relevant to Health Savings Accounts (HSAs) and high deductible health plans (HDHPs). The table below summarizes those adjustments and other applicable limits.

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2027.

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage if the family out-of-pocket limit is above $12,000

(2027 plan years) or $10,600 (2026 plan years). Exceptions to the ACA’s out-of-pocket limit rule have been available for certain non-grandfathered small group plans eligible for transition relief (referred to as “Grandmothered” plans) since policy years renewed on or after January 1, 2014. Each year, CMS has extended this transition relief for any Grandmothered plans that have been continually renewed since on or after January 1, 2014. However, in its March 23, 2022 Insurance Standards Bulletin, CMS announced that the limited nonenforcement policy will remain in effect until CMS announces that such coverage must come into compliance with relevant requirements. Thus, we will no longer see annual transition relief announced.

Direct Primary Care Service Arrangement Limits

As set forth in the Reconciliation Act (i.e., the One Big Beautiful Bill) and IRS Notice 2026-5, in 2026, direct primary care service arrangements (“DPCSA”) are not considered disqualifying coverage for HSA eligibility (and therefore will not preclude an employee from qualifying for HSA coverage), as long as, among other requirements, the fixed periodic fee for the DPCSA is no more than $150 per month for the individual (or $300 per month if the arrangement covers more than one individual). While these limits are intended to be indexed for inflation for months beginning after December 31, 2026, Rev. Proc. 2026-24 provides that the indexed limits will not change in 2027. Thus, they remain $150 per month for the individual ($300 for more than one individual) for months beginning in 2027.

Next Steps for Employers

As employers prepare for the 2027 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

• HSA-qualified family HDHPs cannot have an embedded individual deductible that is lower than the minimum family deductible of $3,500.
• The out-of-pocket maximum for family coverage for an HSA-qualified HDHP cannot be higher than $17,400.
•  For months beginning in 2027, the monthly fee for a DCPSA cannot be higher than $150 for an arrangement covering one individual and $300 for an arrangement covering more than one individual.

All non-grandfathered plans (whether HDHP or non-HDHP) must cap out-of-pocket spending at $12,000 for any covered person. A family plan with an out-of-pocket maximum in excess of $12,000 can satisfy this rule by embedding an individual out-of-pocket maximum in the plan that is no higher than $12,000. This means that for the 2027 plan year, an HDHP subject to the ACA out-of-pocket limit rules may have a $8,700 (self-only) / $17,400 (family) out-of-pocket limit (and be HSA-compliant) so long as there is an embedded individual out-of-pocket limit in the family tier no greater than $12,000 (so that it is also ACA-compliant).

About the Author. This alert was prepared for Alera Group, Inc. by Barrow Lent LLP, a national law firm with recognized experts on ERISA and the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2026 Barrow Lent LLP. All Rights Reserved.