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For 2027, employees may contribute up to $3,500 to a health FSA, an increase from $3,400 for 2026, the IRS announced Nov. 5. The maximum amount an employer may permit employees to carry over into the following plan year will rise to $700, from $680 in 2026. Thresholds are adjusted annually for inflation and are usually announced around the time when employees are enrolling in benefits. 

FSAs can be used on a wide range of medical expenses, including preventive exams, doctor visits, surgical procedures, and dental and vision care, along with many items that employees rely on every day, like over-the-counter medications and pain relief products, bandages, thermometers, menstrual care products, and baby health products. Unlike health savings accounts, however, they are use-it-or-lose-it, meaning that most account balances expire at the end of the year. 

The IRS announced the health savings account (HSA) and high-deductible health plan figures back in May. The annual limit on HSA contributions for self-only coverage in 2027 will be $4,500, a 2.3% increase from the $4,400 limit in 2026. For family coverage, the HSA contribution limit will jump to $9,000 next year, up 2.9% from $8,750 in 2026.