Health savings accounts (HSAs) are a popular type of tax-advantaged medical savings account available to individuals enrolled in high deductible health plans (HDHPs). Individuals can use their HSAs to pay for expenses covered under an HDHP until their deductible is met, or to pay for qualified medical expenses not covered under the HDHP, such as dental or vision expenses.
HSAs provide a triple tax advantage: Contributions, interest or earnings, and amounts distributed for qualified medical expenses are all exempt from federal income tax, Social Security/Medicare tax and most state income taxes. Due to an HSA’s potential tax savings, federal tax law includes strict rules for HSAs, including limits on annual contributions and HDHP cost sharing.
HSAs are individually owned accounts, which means that individuals keep their HSAs even if they switch jobs or change their health plan coverage. Also, since there is no deadline for spending HSA money, individuals can use HSAs to save for future medical expenses.
The chart below summarizes key features for HSAs for 2027.
Annual Limits
- The 2027 contribution limit is $4,500 for individuals with self-only HDHP coverage and $9,000 for individuals with family HDHP coverage.
- Individuals who are age 55 or older may make an additional $1,000 “catch-up” contribution.
- For 2027 plan years, the minimum deductible is $1,750 for self-only HDHP coverage and $3,500 for family HDHP coverage.
HSA Advantages
- HSAs have three levels of tax savings: Contributions, interest or earnings, and distributions for medical expenses are all tax-free.
- Individuals keep their HSAs even if they change jobs, change medical coverage or make other life changes.
- There is no deadline for using HSA funds, which allows individuals to save for future expenses.
LINKS & RESOURCES
- IRS Publication 969, “Health Savings Accounts and Other Tax-favored Health Plans”
- IRS Rev. Proc. 2026-24, which includes the inflation-adjusted HSA limits for 2027
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2026 Zywave, Inc. All rights reserved.
