Key takeaways
- The IRS has raised the healthcare Flexible Spending Account (FSA) contribution limit from $3,400 to $3,500 for 2027, with the maximum carryover amount increasing from $680 to $700.
- Commuter benefit limits (both parking and transit) will increase to $350 per month for 2027, up from $340 previously.
- Open enrollment is the right time to educate employees on these accounts and how they can maximize them for financial readiness.
As Open Enrollment gets into full swing for most employers, the Internal Revenue Service (IRS) has released updated contribution limits for Flexible Spending Accounts (FSAs), Commuter Benefits, and other programs. Benefits teams are helping employees understand their annual contribution options. Below, we’ll cover the upcoming changes and offer practical tips to help employers prepare for Open Enrollment.
What are the IRS 2027 FSA contribution limits?
For health FSAs, the IRS increased the annual employee contribution limit from $3,400 to $3,500 to adjust for inflation.
| Health Flexible Spending Accounts | 2027 | 2026 |
|---|---|---|
| Annual contribution limit | $3,500 | $3,400 |
If your plan allows carryover, the maximum carryover amount also increased from $680 to $700.
- Healthcare FSA annual contribution limit (2027): $3,500 (up $100 from $3,400)
- Common eligible expenses include:
- Healthcare copayments
- Healthcare deductibles
- Prescription medication
- Over-the-counter medications
- Dental and vision expenses
- FSA carryover maximum (if your plan allows carryover): $700 (up $20 from $680)
Action steps you can take now:
- Update your open enrollment materials to reflect the new $3,500 limit and $700 carryover cap (if your plan offers carryover).
- Remind employees what an FSA can cover – check out our guide to eligible FSA expenses here.
- Remind employees of the “use it or lose it” concept in simple terms and clearly explain your plan’s carryover or grace period rules, if offered.
How did the IRS update Commuter Benefit contribution limits for 2027?
The IRS increased the monthly limits for both qualified parking and transit benefits to $350 per month, up from $340 in 2026.
| Commuter accounts | 2027 | 2026 |
|---|---|---|
| Parking – monthly limit | $350 | $340 |
| Transit and vanpooling – monthly limit | $350 | $340 |
Action steps you can take now:
- Confirm your payroll deductions and enrollment portal display the correct $350 monthly maximums.
- Coordinate early with any commuter vendor to avoid last-minute corrections during open enrollment.
What are the maximum amounts for adoption assistance in 2027?
This year, adoptive parents will also see an increase in the maximum credit allowed for 2027. It will jump to $18,250 per eligible child, an increase from $17,670 in 2026. The maximum amount of the credit that may be refundable is $5,280. These updates are important for families planning to adopt, as they provide enhanced financial support through exclusions and credits on their tax obligations.
| Adoption assistance exclusion and adoption credit | 2027 | 2026 |
|---|---|---|
| Phase out (adjusted gross income) | $273,680 - $313,680 | $265,080 - $305,080 |
| Adoption tax credit limit | $18,250 | $17,670 |
- Maximum adoption credit (2027): $18,250 per eligible child, up from $17,670 in the previous year.
- Refundable amount (2027): $5,280
- Why it matters: Families may be able to exclude more adoption-related expenses from taxable income and claim a larger credit, which can reduce the overall cost of adoption.
Action steps you can take now:
- Update adoption support materials and enrollment portals as needed.
How much can be contributed to a QSEHRA in 2027?
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) limits will also see small boosts in 2027. These accounts provide a flexible solution for smaller businesses and their employees to pay for health coverage.
| QSEHRA | 2027 | 2026 |
|---|---|---|
| Individual coverage | $6,700 | $6,450 |
| Family coverage | $13,550 | $13,100 |
For 2027, QSEHRA limits increased to:
- $6,700 for individual coverage (up $250 from 2026)
- $13,550 for family coverage (up $450 from 2026)
Action steps you can take now:
- Verify that your plan documents and employee guides reflect the new annual limits.
- Add a plain-language reminder that QSEHRAs reimburse eligible premiums and qualified medical expenses, subject to plan rules.
What are the 2027 contribution limits for MSAs?
Medical Savings Accounts (MSAs) offer individuals a tax-advantaged way to save for medical expenses, specifically through high-deductible health plans (HDHPs).
| Archer Medical Savings Account | 2027 | 2026 | |
|---|---|---|---|
| Minimum/maximum deductible amounts for the qualifying HDHP | Individual coverage | $3,000 - $4,550 | $2,900 - $4,400 |
| Family coverage | $6,050 - $9,050 | $5,850 - $8,750 | |
| Maximum out-of-pocket expenses (other than for premiums) for covered benefits to not exceed | Individual coverage | $6,050 | $5,850 |
| Family coverage | $11,050 | $10,700 |
For 2027 Archer MSA-qualified HDHPs, the IRS set:
- Minimum deductible (individual coverage): $3,000
- Maximum deductible (individual coverage): $4,550
- Minimum deductible (family coverage): $6,050
- Maximum deductible (family coverage): $9,050
Action steps you can take now:
- If your workforce includes MSA participants, include these thresholds in your plan comparison or compliance materials.
- Keep definitions simple so employees understand how an MSA differs from an HSA, when relevant.
What are the 2027 HSA contribution limits?
The IRS announced new contribution limit increases for Health Savings Accounts (HSAs) in May 2026, but it’s still a good idea for employers to double check the information they are sharing with employees during Open Enrollment.
| Health Savings Account (HSA) | 2027 | 2026 | |
|---|---|---|---|
| Minimum deductibles for a qualifying HDHP | Individual coverage | $1,750 | $1,700 |
| Family coverage | $3,500 | $3,400 | |
| Annual contribution limits | Individual coverage | $4,500 | $4,400 |
| Family coverage | $9,000 | $8,750 | |
| Catch-up contributions allowed for those 55 years and older | $1,000 | $1,000 | |
| Maximum annual HDHP out-of-pocket expenses (excluding premiums) | Individual coverage | $8,700 | $8,500 |
| Family coverage | $17,400 | $17,000 |
Here are the updated HSA contribution limits for 2027:
- HSA contribution limits: $4,500 (individual) and $9,000 (family)
- HDHP minimum deductibles: $1,750 (individual) and $3,500 (family)
- Out-of-pocket maximums: $8,700 (individual) and $17,400 (family)
Action steps you can take now:
- Double-check every place employees might see these numbers, including benefit guides, intranet pages, FAQs, payroll FAQs, and vendor portals.
- Offer a simple per-paycheck calculator or worksheet so employees can confidently set elections.
How should benefits leaders communicate IRS limits during Open Enrollment?
The updated 2027 IRS limits give employees and their families a valuable opportunity to increase pre-tax savings, prepare for essential expenses, and get more from their benefits. Employers can help spread the word in three key ways:
- Refresh your enrollment materials: Review your 2027 benefits booklet, Open Enrollment webinar slides, portal, and other communications to ensure they include the revised contribution limits. HealthEquity clients can use the Resource Builder in the client portal to generate customizable enrollment materials reflecting the new limits. Additionally, the OE Toolkit offers standard resources across all HealthEquity accounts.
- Share calculation tools: Help employees determine how much to contribute from each paycheck by providing calculators or links to online resources.
- Repeat the message: Benefits teams know that employees often need to encounter information several times before it sticks. Create multiple opportunities for them to learn and become comfortable with the new IRS limits. HealthEquity’s Content Library is a helpful starting point for member benefits education.
Together, these contributions can make a meaningful difference for employees and their families. Open Enrollment gives benefits teams an ideal opportunity to clarify available options, help employees increase their savings, and support thoughtful financial decisions for their households.
