The IRS has released the 2027 cost-of-living adjusted limits for Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs). Changes to these limits will take effect January 2027.
HSA Contribution Limits: The 2027 limit is $4,500 for individuals with self-only HDHP (up from $4,400 in 2026), and $9,000 for individuals with family HDHP coverage (up from $8,750 in 2026).
HSA Catch-Up Contribution: Individuals age 55 and older can contribute an additional $1,000 catch-up contribution annually. This amount remains unchanged for 2027.
HDHP Minimum Deductibles: The 2027 deductible is $1,750 for self only HDHP coverage (up from $1,700 in 2026), and $3,500 for family HDHP coverage (up from $3,400 in 2026).
HDHP Out-of-Pocket Maximums: The 2027 limit, including deductibles, copayments, and coinsurance, is $8,700 for self-only HDHP coverage (up from $8,500 in 2026), and $17,400 for family HDHP coverage (up from $17,000 in 2026).
EBHRA (Expected Benefit HRA) Contribution Limit: The 2027 maximum amount is $2,250 (up from $2,200 in 2026).
The short answer is no, you don’t file a Form 5500 for the cafeteria plan itself. But you might have to file one for the specific benefits inside it.
Think of a cafeteria plan (a Section 125 plan) like a shopping cart. The cart itself doesn’t trigger tax or reporting rules—but the items you put inside the cart might.
Here is how it works in three simple steps.
1. The “Shopping Cart” is Free (The IRS Rule)
A cafeteria plan is just a tax structure that lets employees buy benefits using pre-tax dollars. The IRS suspended the rule requiring a Form 5500 for the plan structure itself. So, you can cross the cafeteria plan itself off your filing list.
2. Check the “Items” Inside (The DOL Rule)
While the cart is exempt, the Department of Labor (DOL) cares about the actual benefits you are funding through it. These are called component plans.
You need to look at each individual benefit you offer pre-tax, such as:
Your group health insurance plan
A Health FSA (Flexible Spending Account)
Dental or vision insurance
3. The “Under 100” Rule (Who actually has to file?)
Most small businesses don’t have to file a Form 5500 because of a size exemption.
If you have FEWER than 100 participants: You usually do not have to file a Form 5500 for your benefits, as long as they are paid out of the company’s general bank account or through an insurance company.
If you have 100 or MORE participants: You must file a Form 5500 for that specific benefit (like your main health insurance plan).
> Note: “Participants” usually means employees signed up for the plan on the very first day of the plan year. You do not count their dependents (spouses or kids).
Summary Checklist for HR
Count your heads: Did any of your pre-tax benefits have 100 or more employees enrolled on day one of the plan year?
If NO: You are likely exempt from filing a Form 5500 entirely.
If YES: You must file a Form 5500 for that specific benefit plan. You’ll do this electronically using the government’s online system, called EFAST2.
Pro-Tip: If you do have over 100 employees, ask your insurance broker about a “Wrap Document.” This combines all your different benefits into one single bundle so you only have to file a single Form 5500 instead of three or four separate ones.
Yes—in many cases, you should. If an individual expects to receive COBRA coverage, even if they were never enrolled in your plan, you are generally required to provide a COBRA Notice of Unavailability explaining why they are not eligible.
When Is a Notice of Unavailability Required?
You must send this notice when:
A qualifying event is reported, but the individual is not entitled to COBRA, or
A request for a COBRA extension (disability or second event) is denied
Importantly, eligibility—not enrollment—doesn’t determine whether the notice is needed. If someone reasonably expected coverage, the notice applies.
Who Should Receive the Notice?
The notice must go to the individual expecting COBRA coverage, not necessarily the person who reported the event.
Example: If an employee reports a qualifying event for their child who was never covered, the child—not the employee—should receive the notice.
What Should the Notice Include?
The notice must be:
Written in clear, easy-to-understand language
A specific explanation of why COBRA is unavailable
Tailored to the individual’s situation
Include:
The qualifying event (or request)
The reason coverage is denied (e.g., not enrolled in the plan)
Contact information for questions
Timing Requirements
Provide the notice within 14 days after the plan administrator receives notice of the qualifying event or request—the same deadline as a COBRA election notice.
How Should It Be Delivered?
Use a method reasonably calculated to ensure receipt. Best practice: send via first-class mail, though hand delivery and compliant electronic delivery are also acceptable.
Key Takeaway
Even if someone isn’t covered under your plan, you must send a COBRA Notice of Unavailability if they expected coverage. Doing so within the required timeframe helps ensure compliance and reduces potential risk for your organization.
Summer is the perfect time to put your FSA or HSA funds to work. With sunshine, travel, outdoor activities, and heat-driven health concerns, many everyday summer essentials are actually eligible for reimbursement—saving you money while prioritizing your health.
To help you maximize your benefits before funds expire, here are the top five FSA- and HSA-eligible items to purchase this summer, all available through the FSA Store, along with tips on why they matter and how to use them.
1. Sunscreen (SPF 15+)
Why it’s essential: Excessive sun exposure increases the risk of skin cancer and premature skin aging. Sunscreen is one of the most important summer health investments—and it’s FSA/HSA eligible as long as it provides SPF 15 or higher.
Best uses this summer:
Beach and pool days
Outdoor workouts or sports
Hiking, travel, and everyday commuting
You’ll find mineral, reef-safe, sweat-resistant, and sensitive-skin options available.
Why it’s essential: From scraped knees to blisters and minor burns, summer activities often bring minor injuries. A well-stocked first aid kit keeps you prepared whether you’re camping, traveling, or hosting backyard gatherings.
Why it’s essential: Grass pollen, ragweed, and increased outdoor exposure make summer allergies a real challenge. Many over-the-counter allergy treatments are FSA/HSA eligible without a prescription, thanks to IRS rule updates.
Why it’s essential: Summer activities often mean more movement—and more strain. Whether it’s sore muscles from outdoor workouts, joint discomfort from travel, or minor aches from weekend projects, pain relief and recovery products are among the most practical ways to use FSA or HSA funds.
Why it’s essential: Road trips, flights, cruises, and amusement parks peak during summer—and so does motion sickness. Many motion sickness treatments qualify for FSA or HSA reimbursement, helping travelers stay comfortable without extra cost.
Eligible summer favorites include:
Motion sickness medications
Wrist bands for nausea relief
Anti-nausea remedies for travel-related discomfort
These products are especially useful for families, frequent travelers, and those planning long-distance vacations.
Planning tip: Motion sickness items are often overlooked but can make a major difference in summer travel comfort—making them a smart, proactive FSA/HSA purchase.
Why Buying Summer Essentials With FSA or HSA Funds Makes Sense
Using pre-tax dollars through your Flexible Spending Account (FSA) or Health Savings Account (HSA) can reduce your out-of-pocket healthcare costs by up to 30%, depending on your tax bracket. Summer is an ideal time to stock up because:
FSAs often have “use-it-or-lose-it” deadlines
Summer health needs are predictable and recurring
Many eligible items double as travel and family essentials
The FSA Store only sells products that are verified as FSA/HSA eligible, eliminating reimbursement guesswork.
If you’re wondering what to buy with your FSA or HSA funds this summer, start with essentials that protect your skin, manage allergies, prevent injuries, and support hydration. These purchases aren’t just eligible—they’re practical, preventative, and seasonally smart.
Stock up now, stay healthy all summer long, and make the most of every pre-tax dollar.
Smart HRA, FSA, and HSA Tips to Lower Healthcare Costs
Maximizing your employee health benefits is one of the smartest financial moves you can make each year. Yet many employees enroll in Health Reimbursement Arrangements (HRAs), Flexible Spending Accounts (FSAs), and Health Savings Accounts (HSAs) without fully using the money available to them.
When used strategically, these benefits can significantly reduce out‑of‑pocket healthcare costs, improve cash flow, and even support long‑term financial planning.
This guide shares practical, real‑world tips to maximize your HRA, FSA, and HSA in 2026—so you don’t leave money on the table.
Understanding the Difference Between HRA, FSA, and HSA
Before spending, it’s important to understand how each health benefit account works and what it’s designed to cover.
Health Reimbursement Arrangement (HRA)
An HRA is an employer‑funded account that reimburses employees for eligible medical expenses. Employees do not contribute, and eligible expenses vary by plan.
Flexible Spending Account (FSA)
An FSA allows employees to contribute pre‑tax dollars for qualified healthcare expenses. Many FSAs are subject to a use‑it‑or‑lose‑it rule, making planning essential.
Health Savings Account (HSA)
An HSA is a tax‑advantaged savings account available to employees enrolled in a high‑deductible health plan (HDHP). HSAs offer long‑term savings potential and roll over year after year.
Knowing how these accounts differ is the first step in maximizing your health benefits.
How to Use Your HRA to Reduce Medical Expenses
If your employer offers an HRA, it can dramatically reduce your out‑of‑pocket healthcare costs—especially early in the plan year.
Common HRA‑eligible expenses include:
Primary care and specialist visits
Prescription medications
Diagnostic tests and lab work
Mental health therapy and counseling
Physical therapy or chiropractic care
Because HRAs are employer‑funded, using them is like using money your employer has already allocated for your care. Always review your plan’s eligibility guidelines.
Smart Ways to Spend Your FSA Before Funds Expire
A Flexible Spending Account (FSA) helps lower taxable income, but unused funds may be forfeited if not spent by your plan’s deadline.
