2027 Employee Benefit Limits for Employers

What Are the 2027 Employee Benefit Limits?

For 2027, the HSA limit is $4,500 (self-only) and $9,000 (family), the Social Security wage base is $192,300, and the ACA affordability percentage is 10.22%. The IRS has not yet set the 2027 health FSA and 401(k) limits.

“Not yet announced” means the IRS had not published the 2027 figure when we last checked. The IRS usually releases the FSA, transit, QSEHRA and adoption limits in its annual inflation revenue procedure, and the retirement plan limits in a separate notice, both in the fall. Some SIMPLE plans have different catch-up limits; check with your plan provider.

What Changed for Health Accounts in 2027?

HSA and HDHP limits rose about 2–3% for 2027, under IRS Rev. Proc. 2026-24. The dependent care FSA limit stays at $7,500 per household, because the 2025 tax law set it as a fixed amount with no inflation adjustment.

• HSAs: Employer and employee contributions count toward the same $4,500 or $9,000 limit. The $1,000 catch-up for age 55 and older is set by law and does not change.
• HDHPs: For plan years that start in 2027, a plan must have a deductible of at least $1,750 (self-only) or $3,500 (family) and an out-of-pocket maximum of no more than $8,700 or $17,400 for employees to stay HSA-eligible.
• Health FSAs: The 2026 limit is $3,400. Plans can allow either a carryover of unused money or a grace period, not both.
• Dependent care FSAs: The limit went from $5,000 to $7,500 in 2026. See our dependent care FSA guide for employers.

What Are the 2027 401(k) and SIMPLE IRA Limits?

The IRS has not yet announced the 2027 401(k) and SIMPLE IRA limits. For 2026, employees can defer up to $24,500 to a 401(k) and $17,000 to a SIMPLE IRA. The IRS usually publishes next year’s limits in late October or November.

One 2026 change affects payroll directly. Employees age 50 and older whose prior-year FICA wages from your company were more than $150,000 must make catch-up contributions as Roth (after-tax) contributions. Your payroll system needs to flag those employees.

Keep one difference in mind: 401(k) deferrals lower income tax, but they still count as wages for Social Security and Medicare tax. Section 125 benefits do not. That difference matters for your payroll tax cost.

What Do the 2027 ACA Numbers Mean for Employers?

For 2027, coverage is affordable if the employee’s share for the lowest-cost self-only plan is no more than 10.22% of household income. The 4980H(a) penalty is $3,780 per full-time employee (minus 30), and the 4980H(b) penalty is $5,670 per affected employee.

These rules apply to applicable large employers: companies with 50 or more full-time employees, including full-time equivalents. If you are near that line, count carefully: part-time hours add up to full-time equivalents.

• Affordability: 10.22% is the first time the percentage is above 10%. It gives employers a little more room on employee premium contributions. Employers can test it with one of three safe harbors: W-2 wages, rate of pay or the federal poverty line.
• 4980H(a): Applies if you do not offer coverage to at least 95% of full-time employees and at least one of them gets a premium tax credit. Monthly, it is $315 per full-time employee after the first 30.
• 4980H(b): Applies for each full-time employee who gets a premium tax credit because your coverage was unaffordable or did not provide minimum value. It cannot be more than the 4980H(a) amount.

Can a 50-Employee Company Use a QSEHRA?

No. A QSEHRA is only for employers that are not applicable large employers, which means fewer than 50 full-time employees, including full-time equivalents, and no group health plan. The 2026 limit is $6,450 self-only and $13,100 family.

Larger employers that want to reimburse individual health insurance usually look at an ICHRA instead. See QSEHRA vs. ICHRA for the differences.

What Is the Social Security Wage Base for 2027?

The Social Security wage base is $192,300 for 2027, up from $184,500. Employers pay 6.2% Social Security tax on each employee’s wages up to that amount, a maximum of $11,922.60 per employee. Medicare tax of 1.45% has no cap.

For most hourly workforces, the wage base change has little effect, because few employees earn that much. Your total employer FICA rate stays at 7.65% of almost every payroll dollar. To see what that costs your business, try our Section 125 savings calculator.

How Do Pre-Tax Benefits Change the Payroll Tax Math?

Benefits paid through a Section 125 cafeteria plan, such as health premiums, health FSAs and dependent care FSAs, are not wages for Social Security and Medicare tax. Each pre-tax dollar saves the employer 7.65% in FICA tax, up to the wage base.

For employers with 50 or more employees, our Section 125 savings plan adds pre-tax benefits for every employee, including unlimited virtual care with no copay, $0-copay generic prescriptions and hospital indemnity cash benefits. Most employers save $650–$850 per employee per year, and employee take-home pay typically rises about 4–6%.

The plan works alongside your existing health insurance. There is no setup fee and no minimum contract. See how Section 125 lowers FICA tax and our Section 125 plan guide for employers.

Frequently Asked Questions

What is the HSA contribution limit for 2027?

For 2027, the HSA limit is $4,500 for self-only coverage and $9,000 for family coverage. People age 55 or older can add a $1,000 catch-up. Employer and employee contributions count toward the same limit.

What is the 401(k) contribution limit for 2027?

The IRS has not yet announced the 2027 401(k) limit. For 2026, the limit is $24,500, plus an $8,000 catch-up at age 50 or older, or $11,250 at ages 60 to 63. We will update this page when the IRS publishes it.

What is the ACA affordability percentage for 2027?

The ACA affordability percentage is 10.22% for plan years that start in 2027, up from 9.96% in 2026. It is the first time the percentage is above 10%.

Is the dependent care FSA limit changing in 2027?

No. The dependent care FSA limit stays at $7,500 per household, or $3,750 for married people filing separately. The 2025 tax law set this amount from 2026 on, and it is not adjusted for inflation.

What is the Social Security wage base for 2027?

The 2027 Social Security wage base is $192,300, up from $184,500 in 2026. Employers pay 6.2% on each employee’s wages up to that amount, a maximum of $11,922.60 per employee.

Sources

Every figure on this page comes from these official sources. We update the table as the IRS and SSA release new numbers.

• 2027 HSA, HDHP and excepted benefit HRA limits: IRS Rev. Proc. 2026-24
• 2026 HSA, HDHP and excepted benefit HRA limits: IRS Rev. Proc. 2025-19
• 2026 health FSA, carryover, transit, parking, adoption and QSEHRA limits: IRS Rev. Proc. 2025-32
• Dependent care assistance limit ($7,500 from 2026): 26 U.S.C. § 129
• 2026 401(k), catch-up and SIMPLE IRA limits: IRS news release
• Retirement plan limits by year: IRS COLA table
• Social Security wage base: SSA contribution and benefit base
• 2027 ACA affordability percentage (10.22%): IRS Rev. Proc. 2026-26
• 2026 ACA affordability percentage (9.96%): IRS Rev. Proc. 2025-25
• 2027 employer mandate (4980H) penalty amounts: IRS Rev. Proc. 2026-22
• 2026 employer mandate (4980H) penalty amounts: IRS Rev. Proc. 2025-26
• Tax treatment of cafeteria plan benefits: IRS Publication 15-B