Revenue Procedure 2026-24, May 29, 2026

The Internal Revenue Service recently issued Revenue Procedure 2026-24 to address the statutorily required adjustments for tax year 2027. The express purpose of this revenue procedure is to provide "the 2027 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under section 223 of the Internal Revenue Code (Code) and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs) provided under § 54.9831-1(c)(3)(viii) of the Pension Excise Tax Regulations". Practitioners should take immediate note of these adjustments to ensure proper tax planning and compliance for their clients heading into 2027.

Legislative Updates and Direct Primary Care Service Arrangements

Before detailing the standard HSA adjustments, it is critical to highlight recent legislative changes to IRC § 223. As noted in the ruling, "Section 71308 of Public Law 119-21, 139 Stat. 72, 325-326 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, added section 223(c)(1)(E) to the Code".

This newly added subsection provides targeted relief for taxpayers utilizing direct primary care service arrangements (DPCSAs). Historically, such arrangements risked disqualifying an individual from HSA contributions by acting as non-qualifying secondary coverage. However, under IRC § 223(c)(1)(E), "a direct primary care service arrangement (DCPSA) shall not be treated as a health plan for the purposes of section 223(c)(1)(A)(ii) provided that, with respect to any individual for any month, the aggregate fees for all DPCSAs with respect to the individual do not exceed $150 ($300 in the case of an individual with any DPCSA that covers more than one individual)".

While this provision became broadly effective for months beginning after December 31, 2025, the ruling clarifies that the baseline "$150 and $300 amounts are adjusted for inflation for months beginning after December 31, 2026". For the upcoming tax year, the limits remain steady: "For calendar year 2027, a DPCSA is not treated as a health plan with respect to an otherwise eligible individual if the aggregate monthly fees for all DPCSAs with respect to the individual do not exceed $150 or, if the individual is covered by a DPCSA that covers more than one individual, $300".

HSA Contribution Limitations for 2027

The revenue procedure establishes the annual deduction limits for HSA contributions. For clients carrying individual coverage, "the annual limitation on deductions under section 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $4,500". For those covering dependents, "the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $9,000".

Defining a High Deductible Health Plan for 2027

To qualify for the aforementioned deductions, taxpayers must be covered by a qualifying High Deductible Health Plan (HDHP). Revenue Procedure 2026-24 sets forth the specific numeric parameters required under IRC § 223(c)(2)(A). For 2027, a qualifying HDHP is legally defined "as a health plan with an annual deductible that is not less than $1,750 for self-only coverage or $3,500 for family coverage".

In addition to the minimum deductibles, the health plan must strictly limit out-of-pocket expenditures. The ruling mandates that "the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $8,700 for self-only coverage or $17,400 for family coverage". Tax professionals must carefully verify that clients' employer-sponsored or marketplace plans meet both the minimum deductible and maximum out-of-pocket thresholds to secure the above-the-line deduction for HSA contributions.

Excepted Benefit HRA Limits

The IRS has also updated the newly available amounts for excepted benefit HRAs under the Pension Excise Tax Regulations. For 2027, "the maximum amount that may be made newly available for the plan year for an excepted benefit HRA under § 54.9831-1(c)(3)(viii) is $2,250". Practitioners advising employers on benefit plans or calculating individual tax liabilities involving such arrangements can refer to "§ 54.9831-1(c)(3)(viii)(B)(1) for further explanation of this calculation".

Effective Dates

The provisions established by Revenue Procedure 2026-24 are officially "effective for HSAs for calendar year 2027, for DPCSAs for months beginning in calendar year 2027, and for excepted benefit HRAs for plan years beginning in 2027". Consequently, tax professionals should integrate these updated limits into their 2027 tax projection software and advisory communications immediately.

Prepared with assistance from NotebookLM.