2027 employee benefits planning: Indexed limits and open enrollment readiness

As open enrollment approaches, the IRS has released its latest health plan related updates to annual deductible and contribution limits for individuals enrolled in high-deductible health plans (HDHP) and also making health savings account (HSA) contributions, as well as clarification of applicable Affordable Care Act (ACA) penalties and limits that employers need to be aware of heading into 2027.

2027 HSA and HDHP limits

The IRS has released 2027 adjustments affecting HSA contributions and HDHP design requirements.

HSA contribution limits:

• Self-only coverage: $4,500 (up from $4,400 in 2026)
• Family coverage: $9,000 (up from $8,750 in 2026)
• Catch-up contribution (age 55+): $1,000 (unchanged)

HDHP minimum annual deductible:

• Self-only coverage: $1,750 (up from $1,700)
• Family coverage: $3,500 (up from $3,400)

HDHP maximum out-of-pocket:

• Self-only coverage: $8,700 (up from $8,500)
• Family coverage: $17,400 (up from $17,000)

Next step: To ensure employees can continue making non-taxable HSA contributions, employers should ensure that all HDHP plans are updated so that minimum deductibles and out-of-pocket maximum limits are compliant with these annual updates, and that pre-tax HSA contributions made by employees are also within 2027 allowable limits as well.

2027 ACA limits

Out-of-pocket maximums:

• Self-only coverage: $12,000 (up from $10,600 in 2026)
• Other-than-self-only coverage: $24,000 (up from $21,200 in 2026)

Action items:

• Confirm that combined cost-sharing limits under all employer health plans do not exceed these limits for medical, pharmacy, and other essential health benefits provided under the plan
• Revise plan documents, summary plan descriptions, and Summary of Benefits and Coverage materials as needed

Affordability percentage limit

For ACA “affordability” safe harbors under Section 4980H(b), the employee-only contributions cannot exceed 10.22% of the employee’s Box 1 Form W-2 wage amount for 2027.  This is up from the 2026 affordability limit of 9.96% and could present a planning opportunity for potential increases in applicable premium contribution rates that help keep pace with increases in health plan costs overall.

Other 2027 benefit limits

Several additional indexed limits remain pending and are typically published in the fourth quarter.

• Health care flexible spending account (FSA) and dependent care FSA contribution caps
• Transit and parking fringe benefit limits
• Adoption assistance exclusion amounts
• Retirement plan contribution and compensation thresholds (401(k), 403(b), IRA)

Important: Once final guidance is issued, update enrollment materials and payroll settings promptly. Remember that plan-specific limits may differ from statutory maximums.

Have questions on these changes? Be sure to connect with your TrueNorth specialist to discuss how these updates impact you.

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Content sponsored by Sandberg Phoenix law firm. This update is not intended to be exhaustive, nor should any discussion or opinions be construed as legal, tax or financial advice. TrueNorth Companies recommends consulting with legal, tax or benefits professionals before making any decisions related to employee benefit plans.