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Kevin Welch, CEO & Founder, Journey Payroll & HR
2027 HSA and HDHP Limits: What Employers Need to Do Before Open Enrollment
Published by Journey Payroll & HR June 2026 | Fort Collins, CO | Serving Colorado employers statewide | Last Reviewed: June 2026 | Reflects IRS guidance announced May 29, 2026
Every spring, the IRS releases updated contribution limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs). For 2027, those figures arrived on May 29, 2026, through Revenue Procedure 2026-24, and they apply to every employer offering these benefits regardless of size or location. If you offer an HSA-eligible plan, this is your planning window.
The time between the IRS announcement and open enrollment exists for a reason. It is enough to confirm your plan still qualifies, update payroll deductions, and communicate changes to employees before January 1. Employers who use it arrive prepared. Those who skip it tend to find themselves correcting enrollment issues under deadline pressure.
Journey Payroll & HR partners with Colorado chambers of commerce to bring timely payroll and benefits guidance directly to the small business community. This article is based on IRS Revenue Procedure 2026-24 and covers what changed for 2027 and what Colorado employers should do before January 1.
Key Takeaways for Colorado Employers
- The 2027 HSA contribution limit is $4,500 for self-only coverage and $9,000 for family coverage
- HDHP minimum deductibles increase to $1,750 for self-only and $3,500 for family coverage
- HDHP Out-of-pocket maximums rise to $8,700 for self-only and $17,400 for family coverage
- All limits take effect January 1, 2027
- Colorado employers who offer HSAs should update payroll systems, plan documents, and employee communications before open enrollment
What Is an HSA and What Is an HDHP?
A health savings account is a tax-advantaged account that employees can use to save and pay for qualified medical expenses. To be eligible to contribute to an HSA, an employee must be enrolled in a qualifying high-deductible health plan. For more on HSA eligibility and rules, visit the IRS HSA guidance page.
A high-deductible health plan is a type of health insurance plan with higher deductibles and lower premiums than traditional plans. HDHPs are designed to be paired with HSAs, giving employees a tax-efficient way to cover out-of-pocket medical costs.
HSA’s offer what many benefits professionals describe as a triple tax advantage:
- Contributions go in pretax
- The balance grows tax-free
- Withdrawals for qualified medical expenses are tax-free.
For small business owners, offering an HDHP paired with an HSA can be a cost-effective way to provide competitive health benefits while giving employees a powerful savings tool.
What Changed for 2027
The IRS released the updated figures on May 29, 2026, giving Colorado employers time to plan and communicate before open enrollment. Note, the catch-up limit is set by statute and not adjusted for inflation. All figures are drawn from the official IRS Revenue Procedure.
HSA Contribution Limits
| Coverage Type | 2026 Limit | 2027 Limit | Change |
|---|---|---|---|
| Self-only | $4,400 | $4,500 | +$100 |
| Family | $8,750 | $9,000 | +$250 |
| Age 55+ Catch-up | $1,000 | $1,000 | $0 |
HDHP Minimum Deductibles
| Coverage Type | 2026 | 2027 | Change |
|---|---|---|---|
| Self-only | $1,700 | $1,750 | +$50 |
| Family | $3,400 | $3,500 | +$100 |
HDHP Out-of-Pocket Maximums
| Coverage Type | 2026 | 2027 | Change |
|---|---|---|---|
| Self-only | $8,500 | $8,700 | +$200 |
| Family | $17,000 | $17,400 | +$400 |
Excepted-Benefit HRA Limit
| Annual Limit (All Coverage Types) | 2026 | 2027 | Change |
|---|---|---|---|
| Annual Limit | $2,200 | $2,250 | +$50 |
Helping Colorado’s local business communities stay compliant with federal updates like these is central to Journey Payroll & HR’s work across the state.
Why These Numbers Matter for Payroll and HR
For small business owners, HSA and HDHP limits are not just benefit figures; they connect directly to how payroll is processed and how employees experience their benefits.
HSA contributions made through payroll are pretax, meaning they reduce what employees owe in taxes. That is a meaningful advantage for both the employee and the employer. When contribution limits increase, employees who want to contribute more to their HSA need their payroll deductions updated to reflect the new figures before January 1, 2027.
It’s worth noting that a 2% or greater shareholder of an S corporation is not eligible to participate in a Section 125 cafeteria plan and therefore cannot make pre-tax HSA contributions through payroll, though they may still contribute directly on an after-tax basis and deduct the contribution on their individual return.
For employers who contribute to employee HSAs as part of their benefits package, the updated limits also define the maximum combined contribution allowed per year. Keeping payroll aligned with these figures helps avoid issues that would otherwise require corrections later. For guidance on employer payroll tax obligations, visit the IRS Employer Tax Guide: https://www.irs.gov/pub/irs-pdf/p15.pdf
Federal benefit limits like these have direct day-to-day implications for Colorado employers, which is why Journey Payroll & HR prioritizes sharing IRS updates through local chamber networks.
What Qualifies as an HDHP in 2027
To be eligible to contribute to an HSA, an employee must be enrolled in a qualifying high-deductible health plan. For 2027, a plan must have a minimum deductible of at least $1,750 for self-only coverage or $3,500 for family coverage, and the plan’s out-of-pocket maximum cannot exceed $8,700 for self-only or $17,400 for family coverage.
Employers offering HDHPs should confirm with their insurance carrier or benefits administrator that their plan still meets these thresholds under the 2027 figures. A plan that qualified in 2026 may need adjustments to remain compliant in 2027.
Journey Payroll & HR encourages Colorado employers to review their plan design now, well ahead of open enrollment, to avoid last-minute changes that can create confusion for employees.
The Opportunity Most Employers Are Missing
Beyond the compliance side, there is a practical opportunity worth noting for small business owners.
Despite the strong tax advantages HSAs offer, most employees are not using them to their full potential. Research from the Employee Benefit Research Institute found that 67% of employees with an HSA use it primarily for current out-of-pocket expenses rather than as a long-term savings tool. Only 35% reported saving for future healthcare costs, and just 28% had invested their HSA funds.
For small business owners, this creates an opportunity to differentiate their benefits package not by spending more, but by communicating more effectively. Journey Payroll & HR finds that employers who take time to explain HSA basics to their employees, including the long-term savings potential, see stronger participation and higher contribution rates during open enrollment. The IRS releases HSA limits each spring specifically to give employers time to plan before open enrollment. Using that window to improve employee education is one of the most practical steps a small business can take on the benefits side.
What Colorado Employers Should Do Before January 1, 2027
With the 2027 figures confirmed, Colorado employers offering HSA-eligible plans should work through the following before the end of the year.
- Confirm with your insurance carrier or benefits administrator that your health plan still meets the 2027 HDHP thresholds.
- Update your payroll system so employees who want to adjust their HSA contributions can do so starting January 1.
- Review any employer HSA contributions to ensure the combined total stays within the annual limit.
- Update open enrollment materials to reflect the 2027 figures.
- Begin employee communication early, as employees who understand the full value of their HSA are more likely to participate and contribute at higher levels.
- Verify your plan with the Colorado Division of Insurance if you have questions about whether your HDHP meets state-specific requirements
Journey Payroll & HR distributes compliance guidance through Colorado chambers of commerce and directly to Colorado employers to help businesses stay ahead of annual updates like these. Learn more at JourneyPayrollHR.com.
For a full overview of HSA rules and employer responsibilities, visit the IRS HSA resource page.
The Bottom Line
While these limits are set federally, their implications are local. For Colorado small business owners, getting payroll systems, plan documents, and employee communications updated before January 1 is the difference between a smooth open enrollment and a stressful one.
Healthcare costs continue to rise, and benefit decisions have real payroll implications that affect both the business and its employees. Staying current on IRS limit changes is part of running a compliant, competitive benefits program regardless of the size of your workforce.
Small businesses that get ahead of these changes before open enrollment are better positioned to reduce administrative corrections and help their workforce make the most of the benefits being offered.
Frequently Asked Questions
What is an HSA? A health savings account is a tax-advantaged account that allows employees enrolled in a qualifying high-deductible health plan to save and pay for qualified medical expenses. Contributions are pretax, the balance grows tax-free, and withdrawals for qualified medical expenses are also tax-free.
What is an HDHP? A high-deductible health plan is a type of health insurance plan with higher deductibles and lower premiums than traditional plans. In 2027, an HDHP must have a minimum deductible of at least $1,750 for self-only coverage or $3,500 for family coverage to qualify for HSA pairing.
Do Colorado employers have to offer an HSA? No. Offering an HSA-eligible health plan is not required under Colorado or federal law. However, many Colorado small businesses choose to offer HDHPs paired with HSAs because of the tax advantages for both the employer and employee. Employer HSA contributions are also pretax, making them a cost-efficient way to enhance a benefits package without significantly increasing overall compensation costs.
What are the 2027 HSA contribution limits? The IRS set the 2027 HSA contribution limit at $4,500 for self-only coverage, up from $4,400 in 2026, and $9,000 for family coverage, up from $8,750 in 2026. All limits take effect January 1, 2027.
What are the 2027 HDHP minimum deductible requirements? For 2027, an HDHP must have a minimum deductible of at least $1,750 for self-only coverage and $3,500 for family coverage, up from $1,700 and $3,400 respectively in 2026.
What are the 2027 HDHP out-of-pocket maximums? The 2027 out-of-pocket maximums are $8,700 for self-only coverage and $17,400 for family coverage, up from $8,500 and $17,000 in 2026.
What is the 2027 excepted-benefit HRA limit? The excepted-benefit HRA limit for 2027 is $2,250, up from $2,200 in 2026.
Can my employer contribute to my HSA? Yes. Employers may contribute to an employee’s HSA, and those contributions count toward the annual limit. For 2027, the combined total of employer and employee HSA contributions cannot exceed $4,500 for self-only coverage or $9,000 for family coverage. Employer contributions are also pretax, making them a tax-efficient way for small businesses to enhance their benefits package.
Do I need to update my payroll system for the 2027 HSA limits? Yes. If employees contribute to their HSA through payroll deductions, those figures should be updated to reflect the new 2027 limits before January 1, 2027 so employees can contribute accurately from the start of the year.
Can an employee contribute to an HSA if their health plan does not qualify as an HDHP? No. To be eligible to contribute to an HSA, an employee must be enrolled in a qualifying employer sponsored high-deductible health plan. Employers should confirm with their insurance carrier that their plan meets the 2027 HDHP thresholds.
When do the 2027 HSA and HDHP limits take effect? All 2027 limits announced by the IRS on May 29, 2026 take effect January 1, 2027.
What should a Colorado small business do if they miss open enrollment deadlines? Missing open enrollment can limit employees’ ability to change their health plan elections until the next annual enrollment period, unless they experience a qualifying life event. For HSA purposes, employees who miss enrollment in an HDHP will not be eligible to contribute to their HSA until they enroll in a qualifying plan. Colorado employers who find themselves behind on open enrollment preparation should contact their benefits administrator or a payroll and HR advisor as soon as possible to understand their options.
About the Source
This article was prepared by Journey Payroll & HR, a payroll and human resources company headquartered in Fort Collins, Colorado, with clients in Denver, Colorado Springs, Boulder, Pueblo, and communities across the state and nationwide. Journey has maintained a 98% client retention rate since its founding in 2010 and is dedicated to helping Colorado employers stay current on payroll, benefits, and HR compliance requirements. This article is provided for educational purposes and reflects IRS guidance announced May 29, 2026. For binding decisions on specific situations, consult a qualified benefits or tax professional.
Journey Payroll & HR publishes ongoing compliance guidance for Colorado employers on topics including payroll tax, HSA and HDHP compliance, benefits administration, FAMLI, Colorado wage law, and HR policy. Visit www.JourneyPayrollHR.com to learn more.