IRS Announces HSA Contribution Limit for 2027

The minimum deductible will increase 2.94% to $1,750, from $1,700.

The IRS calculates the health account inflation adjustments based on a formula given in Internal Revenue Code section (1)(c)(3), which ties the adjustments to changes in a specific government inflation rate, the Chained Consumer Price Index for All Urban Consumers.

The overall C-CPI-U index increased just 2.19% during the 12-month period that ended in January, but the medical care component increased 2.77%. A client with a self-only HSA will face a 0.5-percentage-point gap between the increase in the HSA contribution cap and the increase in medical costs.

What it means: Clients who contribute the maximum amount to HSAs or HRAs every year may feel as if they have to push harder to keep up with increases in health care costs.

Health account parameter basics: Clients can use both HSAs and HRAs to save money for health care expenses without paying federal income taxes on eligible contributions or cash spent on "qualified" expenses.

Clients who contribute to HSAs own any cash that they or their employers contribute to the HSAs. They can invest the assets and keep any investment earnings.

The tradeoff is that they must combine HSAs with high-deductible health plans that have deductibles over a minimum level and annual out-of-pocket spending maximums for covered, in-network care.

The kinds of HRAs covered by the new parameters announcement are accounts used to pay for excepted benefits, such as dental care, rather than the kinds of HRAs used to create alternatives to traditional major medical coverage.

HRA users can combine their HRAs with major medical plans with low deductibles or no deductibles, but they do not own the account value.

The parameters: The increases in the health account parameters in 2027 will be similar to the increases that occurred this year.

Here's what will happen to the parameters in 2027:

A direct primary care practice promises to handle checkups, ordinary sick care and management of many common chronic conditions in exchange for monthly, quarterly or annual membership fees.

A provision in the One Big Beautiful Bill Act of 2025 lets HSA holders use HSA cash to pay DPC membership fees.

The OBBBA provision means that a client with an HSA and an HSA-compatible high-deductible health plan can now use a DPC arrangement to eliminate worries about getting big, unpredictable, pre-deductible bills for ordinary health care.

An HSA owner's DPC spending limits for 2027 will be the figures included in the OBBBA statute: $150 for an individual and $300 for a family.

Chained CPI: When the federal Bureau of Labor Statistics computes ordinary consumer price index figures, it assumes that consumers will keep buying a standard basket of goods and services, even when conditions and prices change.

When the bureau computes the chained CPI figures, it assumes that consumers will substitute cheaper items for similar, more expensive items to hold down spending increases.

Use of the overall chained CPI figure in the health account parameter inflation adjustments helps to reduce the impact of the health account tax breaks on federal government finances but makes the programs less generous for the taxpayers than the programs would be if federal health account laws let the IRS use the ordinary CPI figures to make the parameters adjustments.

The increase in the ordinary CPI was 2.39%, or 0.2 percentage points higher than the chained CPI.

The increase in the medical care component was just 2.77% for the chained CPI and 3.19% for the ordinary CPI.

The ordinary medical care cost inflation figure is 0.42 percentage points higher than the chained CPI increase, and it's 1 full percentage point higher than the overall chained CPI.

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