Health savings accounts provide employees with a smart way to save for medical expenses, even into retirement. Their triple tax benefit comes from their structure: contributions are made pretax, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.

Who benefits from an HSA account

As of December 31, 2024, HSAs covered over 59 million Americans across 39.3 million accounts—the difference reflecting family members covered under a single account. This data comes from a demographic survey by HSA research firm, Devenir, and the American Bankers Association's Health Savings Account Council. Account balances are also increasing as healthcare costs rise. HSA provider, Lively, reported that its clients' average balance was $5,457 in 2025, an 11% year-over-year increase from $4,923 the previous year. In 2025, 29% of covered workers were enrolled in a high-deductible health plan that could be paired with an HSA, according to KFF, a health policy research group. With open enrollment still months away for many companies, there is still time to increase your contributions and learn more about how to best use these accounts.

Higher limits across the board

Beginning in 2027, HSA contribution limits will increase. For self-only coverage, the limit will be $4,500, a 2.3% increase from the $4,400 cap in 2026, based on the latest inflation adjustments. The limit for family coverage will rise to $9,000, up 2.9% from $8,750.

HDHP thresholds will also change in 2027. An HDHP must have a deductible of at least $1,750 for self-only coverage, up from $1,700, and $3,500 for family coverage, up from $3,400. Annual out-of-pocket maximums—which include deductibles and co-payments, but not premiums—cannot exceed $8,700 for self-only coverage, up from $8,500, and $17,400 for family coverage, up from $17,000. The Internal Revenue Service also set the excepted-benefit health reimbursement arrangement limit at $2,250, up from $2,200 in 2026. All new limits take effect Jan. 1, 2027.

The opportunity many are missing

Most individuals are using their HSAs for near-term out-of-pocket costs rather than saving for the long term, according to a report from the Employee Benefit Research Institute. Only 35% reported saving in their HSA for healthcare costs in retirement, and only 28% said they had invested their HSA funds. This pattern overlooks the account's greatest advantage. An HSA delivers its full triple-tax payoff only when the money remains invested and grows untouched, similar to a retirement account. Spending the balance each year essentially turns it into a tax-free checking account for medical bills—which is still useful, but a fraction of what the higher 2027 limits could compound into overtime.

The IRS releases HSA limits every spring, ahead of figures such as flexible spending account and 401(k) contribution limits, providing employers, administrators, and individuals ample time to adjust. If you have questions about these new limits or how to best utilize your HSA, we are here to help. Contact us using the form below to learn more.

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