En esta noticia
Planning ahead for healthcare costs could become a little easier for millions of workers. The Internal Revenue Service (IRS) has raised the annual contribution limit for Health Flexible Spending Accounts (FSAs), allowing eligible employees to set aside an additional $100 compared with the current year.
The adjustment is part of the agency’s annual inflation updates and will apply to tax years beginning in 2027. Although the increase is relatively modest, it gives eligible workers additional flexibility when deciding how much money to allocate to healthcare throughout the year.
IRS confirms a higher Health FSA contribution limit for 2027
The IRS announced that the maximum amount employees can voluntarily contribute to a Health FSA through salary reductions will rise to $3,500 in 2027.
That’s a $100 increase compared with the $3,400 limit established for 2026. The change means workers will be able to set aside a larger portion of their paychecks to cover qualified healthcare expenses without paying federal income and payroll taxes on those contributions, subject to applicable rules.
The agency also increased the maximum amount that employers may allow employees to carry over from one plan year to the next. For plans that offer this option, the limit will reach $700 in 2027, up from $680 in 2026.
However, this provision is not automatic. Employers decide whether their plans allow unused funds to carry over, so employees should check the specific rules of their workplace benefits program.
What is a Health FSA and how can workers use the money?
A Flexible Spending Account is a special account that allows employees to set aside part of their earnings to pay for certain out-of-pocket healthcare expenses.
One of its main advantages is its tax treatment. Contributions are generally deducted from an employee’s paycheck before federal income and Social Security and Medicare taxes are calculated. This can reduce taxable income and help workers save on eligible medical costs.
The money can be used for a variety of qualified expenses, including:
- Medical deductibles: amounts employees must pay before their health insurance begins covering certain services.
- Copayments and coinsurance: the fixed amounts or percentages patients pay for covered medical services.
- Prescription medications: eligible prescription drugs and certain other permitted medicines.
- Medical supplies and equipment: items such as bandages, crutches and blood sugar testing supplies.
- Dental expenses: eligible out-of-pocket dental treatments and services.
Health FSAs can generally cover eligible expenses for employees, their spouses and their dependents. However, the funds cannot be used to pay health insurance premiums.
Workers should review their employer’s FSA rules before contributing
Although the higher limit gives employees more room to save, there is an important rule to consider: Health FSA funds generally must be used within the plan year.
Depending on the employer’s plan, workers may have an additional grace period of up to two and a half months or the option to carry over an allowed amount into the following year. These alternatives are subject to plan rules, and employers are not required to offer either one.
Any money left unused after the applicable deadline may be forfeited. For that reason, employees should estimate their expected healthcare expenses before deciding how much to contribute.