Healthcare expenses can be a significant burden on an individual’s finances. Health Savings Accounts (HSAs) are a valuable way to save money and receive tax benefits. These accounts allow you to save and invest funds for qualified medical expenses. However, it’s important to understand the limitations associated with HSAs. In this article, we’ll explore the limits of an HSA, including eligible expenses, the 2026 and 2027 contribution limits, and the recent law changes that opened HSAs up to a lot more people.
HSA Contribution Limits
In 2026, an individual with self-only coverage may contribute up to $4,400, and a family may contribute up to $8,750. For 2027, those limits rise to $4,500 for self-only coverage and $9,000 for family coverage.
If both spouses in a family are 55 or older and eligible to contribute to a Health Savings Account (HSA), they can contribute a total of $10,750 in 2026 and $11,000 in 2027. That is the standard family contribution limit plus an additional “catch-up” contribution of $1,000 for each spouse who is age 55 or older, resulting in an extra $2,000 total in catch-up contributions for the couple.
Important note: Each spouse must have their own individual HSA to make their separate $1,000 catch-up contributions. They cannot simply add both catch-up contributions to a single family HSA account.
Eligibility for HSA contributions requires enrollment in an HSA-eligible High Deductible Health Plan (HDHP), and you cannot be enrolled in Medicare.
Increases have settled into a steady pattern of roughly 2 to 3 percent a year, a far cry from the roughly 7 percent jump we saw from 2023 to 2024. The $1,000 catch-up amount is written into the law itself and is not indexed for inflation, so it has not moved in years and will not until Congress changes it.
Contributions to an HSA are tax-deductible, and funds in the account grow tax-free. Additionally, they come out tax-free as long as they are used for qualifying medical expenses. This makes HSAs a beneficial way to save money for medical expenses. Just remember, that once you start taking Part A of Medicare, you are no longer able to contribute.
HSA and HDHP Limits: 2025, 2026, and 2027
| Limit | 2025 | 2026 | 2027 |
|---|---|---|---|
| HSA contribution — self-only | $4,300 | $4,400 | $4,500 |
| HSA contribution — family | $8,550 | $8,750 | $9,000 |
| Catch-up contribution (age 55+) | $1,000 | $1,000 | $1,000 |
| HDHP minimum deductible — self-only | $1,650 | $1,700 | $1,750 |
| HDHP minimum deductible — family | $3,300 | $3,400 | $3,500 |
| HDHP maximum out-of-pocket — self-only | $8,300 | $8,500 | $8,700 |
| HDHP maximum out-of-pocket — family | $16,600 | $17,000 | $17,400 |
That second half of the table matters as much as the first. Your plan has to fall inside those deductible and out-of-pocket guardrails to be HSA-qualified in the first place. We see people every year who kept contributing after their employer switched carriers, not realizing the new plan’s deductible dropped below the minimum and disqualified them. Premiums do not count toward the out-of-pocket maximum — only deductibles, copays, and coinsurance.
One more thing people forget: employer contributions count against your limit. If your employer puts $1,000 into your HSA and you have family coverage in 2027, your own maximum is $8,000, not $9,000.
New in 2026: Who Can Have an HSA Just Changed
The One Big Beautiful Bill Act, signed July 4, 2025, made the biggest expansion of HSA access since the accounts were created in 2003. The IRS spelled out the details in Notice 2026-05 in December 2025. Three changes took effect January 1, 2026.
Bronze and Catastrophic plans now qualify
Bronze and catastrophic plans are now treated as HSA-compatible high deductible health plans whether or not they meet the deductible and out-of-pocket tests above. The IRS also clarified that the plan does not have to be purchased through the Exchange to get this treatment. If you buy your own coverage, this may be the first year you are able to fund an HSA.
Telehealth before the deductible is permanent
The pandemic-era rule that let an HDHP cover telehealth and other remote care before you meet your deductible — without costing you HSA eligibility — is now permanent, retroactive to plan years beginning after December 31, 2024.
Direct primary care no longer disqualifies you
Enrolling in a direct primary care arrangement used to knock you out of HSA eligibility entirely, because the IRS viewed that flat monthly fee as a second health plan. That is over. You can now stay HSA-eligible and pay the membership fee from your HSA tax-free, as long as the fee is no more than $150 a month for an arrangement covering one person or $300 a month for one covering more than one. Those same amounts apply in 2027 and begin adjusting for inflation after that.
Long-Term HSA Use
Another benefit of HSAs is that you are able to invest your HSA funds using investment options. Many different companies make this available. HSA funds do not need to be used in the year of deposit, so that means they are in your control. As a result, you can take money out years later to offset a qualified expense. There is no deadline to reimburse yourself — pay a bill out of pocket today, keep the receipt, and reimburse yourself tax-free twenty years from now if you want to. If you do not use the funds, you are able to take them out and they are treated like an IRA during retirement, or you can continue to use them for medical expenses even when you are on Medicare.
One note on timing: the expense has to be incurred after your HSA is established, not just after you became eligible. If you are going to open one, open it early even if you do not fund it right away.
Eligible HSA Expenses
Common Medical Expenses
HSAs cover common medical expenses, including prescription drugs, eyeglasses, eye exams, and dental expenses. What they do not cover is anything that is merely beneficial to general health rather than treatment of a specific condition — gym memberships, most nutritional supplements, and elective cosmetic procedures are the usual examples. Insurance premiums are generally not eligible either, with four exceptions: COBRA, premiums paid while drawing unemployment, qualified long-term care premiums, and once you are 65, Medicare Part A, B, C, and D premiums. Medigap premiums are still not eligible. The Internal Revenue Service’s Publication 502 provides a comprehensive list of qualified medical expenses.
Long-Term Care Premiums
In addition to standard medical expenses, account holders can use HSA funds to pay for long-term care premiums. This is an excellent way to utilize HSA funds if account holders have a surplus in their account. Keep in mind the IRS caps how much of the premium is eligible each year based on your age, and that cap adjusts annually.
Over-the-Counter Medicines and Related Items
Under the CARES Act, passed in March 2020, HSA funds can be used to pay for over-the-counter medicines without a prescription — cold and flu remedies, nasal spray, pain relievers, stomach medication, and so on. That change was permanent, not temporary. The same law made menstrual care products eligible. Vitamins and supplements are a different story: those are only eligible when recommended by a physician to treat a specific diagnosed condition, not for general wellness. Items like a humidifier follow the same rule — eligible when used to relieve a specific medical issue.
Non-qualified withdrawals are taxed as ordinary income plus a 20 percent penalty. That penalty goes away at age 65, at death, or upon disability, though income tax still applies unless the expense qualifies.
What Happens If You Contribute Too Much
Excess contributions carry a 6 percent excise tax for every year the money stays in the account. You can avoid it by pulling the excess amount out, along with any earnings on it, before your tax filing deadline. Excess contributions get reported on Form 5329, and all HSA activity gets reported on Form 8889.
You also have until the tax filing deadline, generally April 15, to make contributions for the prior tax year. For 2026 contributions, that is April 15, 2027.
Open a Health Savings Account
HSAs provide an effective means of saving for medical expenses while obtaining tax benefits. Account holders are encouraged to consult IRS Publication 502 for additional information regarding qualified medical expenses, and to take advantage of the catch-up contribution option if they are over the age of 55. Most banks and credit unions offer HSAs, in addition to many investment firms.
If you have any questions about HSA limits and eligible expenses, or would like to open an HSA, our Johnson City, Tennessee team would be happy to assist you. Visit our online service center or give our office a call to speak with a local agent.
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Closing Word of Warning About Health Sharing Plans
If you are enrolled in a Health Sharing Plan or Medical Sharing Plan, the IRS says you CAN NOT put money into an HSA. You may ask why, well in addition to the simple answer being, “It’s the government, why would it make sense,” the IRS does have rules about HSAs and one of the rules says that you must be enrolled in a High Deductible Health Plan, and since Health Sharing Plans are not “Insurance” plans, that is the portion of the law that says, “No.”
That is still true in 2026, and the new law did not change it. But here is the silver lining: now that every Bronze and Catastrophic marketplace plan counts as HSA-compatible, folks who chose a sharing plan mainly to keep premiums down have a real alternative that keeps the HSA door open. That is worth a conversation. For more information about Health Sharing Accounts and their Pros and Cons, check out our blog. For more information about the tax advantages of an HSA in TN, click here.
Sources
- IRS, Revenue Procedure 2026-24 — 2027 HSA, HDHP, and direct primary care amounts (issued May 29, 2026)
- IRS, Revenue Procedure 2025-19 — 2026 HSA and HDHP amounts (issued May 1, 2025)
- IRS, Treasury, IRS provide guidance on new tax benefits for Health Savings Account participants under the One, Big, Beautiful Bill (IR-2025-119), summarizing Notice 2026-05
- IRS, One, Big, Beautiful Bill provisions — HSA expansion under Section 71307
- IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and Publication 502, Medical and Dental Expenses
This article is for general information and is not tax advice. Please consult your tax professional about your specific situation. Figures reviewed October 29, 2026.