HSA-Eligible Expenses and 2027 HSA Limits: What to Know Before Open Enrollment

Navigating HSA-Eligible Health Care Expenses: What You Need to Know

By Joshua Lavine, CEO and Company Culture Expert, Capitol Benefits · Last updated October 22, 2026

Key takeaways

For 2027 you can contribute up to $4,500 to an HSA with self-only coverage or $9,000 with family coverage, plus $1,000 more if you are 55 or older. Employer contributions count toward the limit.
To contribute, you need an HSA-qualified health plan. For 2027 that means a deductible of at least $1,750 for self-only or $3,500 for family coverage, and no other disqualifying coverage.
Recent federal changes widened HSA access: telehealth before the deductible is now permanent, bronze and catastrophic plans count as HSA-compatible, and direct primary care fees can be paid from an HSA.
Qualified expenses go well beyond doctor visits: dental, vision, hearing aids, over-the-counter medicine and menstrual products all qualify. Cosmetic procedures and most insurance premiums do not.
HSA money rolls over and stays yours. Using it for non-qualified expenses before 65 means income tax plus a 20 percent penalty. Capitol Benefits helps employers in DC, Maryland and Virginia set up and explain HSA-qualified plans.

For 2027 you can put up to $4,500 into a health savings account with self only coverage or $9,000 with family coverage, plus another $1,000 if you are 55 or older, and the plan has to carry a deductible of at least $1,750 for self only or $3,500 for family. Eligible expenses reach well past doctor visits, covering dental, vision, hearing aids, over the counter medicine and menstrual products, while cosmetic procedures and most general wellness purchases do not qualify.

Open enrollment is when most people decide whether an HSA makes sense, and many plans are adding or expanding HSA-qualified options for 2027 as costs rise. If you already have an HSA, now is also a good time to check your contribution against the new limits and get clear on what the account can pay for.

2027 HSA Limits at a Glance

Contribution limit: $4,500 for self-only coverage and $9,000 for family coverage (up from $4,400 and $8,750 in 2026).
Catch-up contribution: An extra $1,000 if you are 55 or older.
Minimum deductible for an HSA-qualified plan: $1,750 for self-only and $3,500 for family coverage.
Maximum out-of-pocket for an HSA-qualified plan: $8,700 for self-only and $17,400 for family coverage.

These figures come from IRS Revenue Procedure 2026-24. Employer and employee contributions combined count toward the annual limit, so subtract any employer deposit before setting your payroll election.

Who Can Contribute

You can contribute to an HSA if you are covered by an HSA-qualified health plan, have no other disqualifying health coverage (such as a general-purpose health FSA or Medicare), and cannot be claimed as a dependent on someone else’s tax return. If your spouse has a general-purpose FSA that can reimburse your expenses, that can affect your eligibility too.

What Changed Under the New Federal Rules

The tax law enacted in July 2025, often called the One Big Beautiful Bill Act, expanded HSA access in three ways:

Telehealth: A plan can cover telehealth and other remote care before the deductible without affecting HSA eligibility. This relief is now permanent for plan years beginning in 2025 and later.
Bronze and catastrophic plans: Starting January 1, 2026, these plans count as HSA-compatible even if they do not meet the usual deductible rules, whether purchased on or off an Exchange.
Direct primary care: Starting in 2026, enrolling in a direct primary care arrangement does not by itself disqualify you from contributing, as long as the fixed fee is no more than $150 a month for an individual or $300 for a family. You can also pay those fees from your HSA.

What HSA Money Can Pay For

The IRS defines qualified medical expenses in Publication 502. The list is broader than most people expect:

Medical care: Doctor and specialist visits, hospital care, lab work, ambulance services and prescription drugs
Dental: Cleanings, X-rays, fillings, crowns, root canals and orthodontics
Vision: Eye exams, glasses, contact lenses and laser eye surgery
Hearing: Hearing exams and hearing aids
Over-the-counter items: Over-the-counter medicines and menstrual care products, without a prescription
Equipment and supplies: Durable medical equipment like crutches, wheelchairs and blood pressure monitors, plus breast pumps
Other care: Acupuncture, mental health care, and treatment for substance use disorders

What Generally Does Not Qualify

Cosmetic procedures
Gym memberships and general wellness purchases, unless tied to treatment for a specific medical condition
Vitamins and supplements taken for general health
Most health insurance premiums. Exceptions include COBRA premiums, coverage while receiving unemployment benefits, qualified long-term care insurance within limits, and Medicare premiums (other than Medigap) once you are 65 or older.

Getting the Most From Your HSA

The triple tax advantage. Contributions go in before tax, growth is tax free, and withdrawals for qualified expenses are tax free. Payroll contributions through an employer plan also avoid Social Security and Medicare taxes. Maryland, Virginia and DC follow the federal treatment of HSAs for state income tax purposes.

Invest what you do not need now. Many HSA providers let you invest the balance once it passes a set amount. Because the money never expires, an HSA can double as a long-term fund for health costs in retirement.

Keep your receipts. You can reimburse yourself later for a qualified expense incurred after your HSA was opened, but you need records to show it qualified.

Watch the Medicare transition. Once you enroll in any part of Medicare, you can no longer contribute. Because Part A coverage can be retroactive up to six months, people approaching 65 should plan the timing carefully. Our guide to HSAs for employees nearing Medicare walks through it.

Know the penalty. Using HSA money for non-qualified expenses before 65 means income tax plus a 20 percent penalty. After 65, non-medical withdrawals are taxed as income but the penalty no longer applies.

For Employers: Making HSAs Work at Open Enrollment

Employees choose HSA-qualified plans when they understand them. A clear comparison of the HSA and FSA, the 2027 limits, and an example of how an employer contribution offsets the deductible does more than a long explanation. Our post on what employees get wrong at open enrollment covers the FSA and HSA mix-up in detail. Our Gaithersburg-based team helps employers across DC, Maryland and Virginia set up HSA-qualified plans and explain them. Talk with us about your options.

Frequently Asked Questions

What are the 2027 HSA contribution limits?
$4,500 for self-only coverage and $9,000 for family coverage, plus a $1,000 catch-up contribution for people 55 and older. Employer and employee contributions combined count toward the limit.

What expenses can I pay with an HSA?
Qualified medical expenses as defined in IRS Publication 502, including doctor visits, prescriptions, dental and vision care, hearing aids, medical equipment, mental health care, and over-the-counter medicines and menstrual products.

Who is eligible to contribute to an HSA?
People covered by an HSA-qualified health plan who have no other disqualifying coverage, are not enrolled in Medicare, and cannot be claimed as a dependent. For 2027 the plan deductible must be at least $1,750 for self-only or $3,500 for family coverage.

What changed for HSAs under the new federal law?
Telehealth before the deductible is permanently allowed, bronze and catastrophic plans count as HSA-compatible starting in 2026, and direct primary care arrangements with fees up to $150 a month for individuals or $300 for families no longer block contributions.

What happens to HSA money I do not use?
It rolls over every year and stays yours, even if you change jobs or health plans. You can keep using it for qualified expenses, including in retirement.

Is there a penalty for using HSA funds for non-medical expenses?
Before age 65, non-qualified withdrawals are subject to income tax plus a 20 percent penalty. After 65, they are taxed as income without the penalty. A tax professional can help with specifics.