Employers heading into 2027 open enrollment face higher premiums and a new set of federal limits. For plan years beginning in 2027, IRS Revenue Procedure 2026-26 sets the ACA affordability percentage at 10.22%, IRS Revenue Procedure 2026-24 raises the HSA contribution limit to $4,500 for self-only coverage and $9,000 for family coverage, and CMS guidance lifts the ACA out-of-pocket maximum to $12,000 for self-only coverage and $24,000 for family coverage.
These changes affect plan design, employee contributions, payroll settings, and compliance for every employer that sponsors group health coverage. The below blog breaks down each 2027 figure, explains what it means in plain terms, and shows how premium costs vary from state to state.
Key Takeaways
-
Premiums keep rising. KFF’s 2026 Employer Health Benefits Survey found that the average family premium reached $28,303 in 2026, up 5% from 2025, while the average worker contribution for family coverage rose 9% to $7,471.
-
The affordability threshold moves up. IRS Revenue Procedure 2026-26 sets the ACA affordability percentage at 10.22% for plan years beginning in 2027, up from 9.96% for 2026.
-
HSA and HDHP limits increase. IRS Revenue Procedure 2026-24 sets 2027 HSA limits at $4,500 (self-only) and $9,000 (family), with HDHP minimum deductibles of $1,750 and $3,500.
-
The ACA out-of-pocket ceiling jumps about 13%. CMS sets the 2027 maximum annual limitation on cost sharing at $12,000 for self-only coverage and $24,000 for other than self-only coverage, up from $10,600 and $21,200.
-
SandStone helps employers act on every change. A SandStone Employee and Group Benefits advisor can benchmark contributions, test affordability, confirm HDHP compliance, and coordinate carrier renewals before enrollment opens.
What Is Open Enrollment for Group Health Insurance?
Open enrollment is the annual window when employees choose, change, or decline the medical, dental, vision, and other benefits their employer offers for the next plan year. Outside that window, employees typically can change elections only after a qualifying life event, such as marriage, the birth of a child, or the loss of other coverage.
For employers with calendar-year plans, the 2027 plan year starts January 1, 2027, so plan decisions, employee elections, and payroll updates need to wrap up before then. The stakes reach far beyond one office: KFF’s 2026 Employer Health Benefits Survey reports that employer-sponsored insurance covers almost 157 million people under age 65.
The elections employees make during this window set their premiums, deductibles, and account contributions for the full year. Clear communication and accurate plan limits help employees choose well and help employers avoid costly corrections later.
How Much Are Employer Health Insurance Premiums Rising?
Employer health premiums continue to outpace paychecks. KFF’s 2026 Employer Health Benefits Survey, which drew on interviews with 1,937 public and private employers with at least 10 workers, found that average annual premiums reached $9,804 for single coverage and $28,303 for family coverage in 2026, both up 5% from 2025. According to the KFF news release, wages rose 3.7%, and general inflation rose 2.7% over the same period.
Employees now shoulder a larger share of that cost. KFF reports that covered workers contributed an average of $1,672 toward single coverage and $7,471 toward family coverage in 2026. The family contribution rose 9%, or $621, in a single year.
Smaller employers feel the most pressure. According to KFF, covered workers at firms with fewer than 200 workers contribute an average of $9,687 toward family coverage, $2,847 more than workers at larger firms. KFF also found that the average single-coverage deductible reached $1,955, with workers at smaller firms facing an average of $2,624 compared with $1,772 at larger firms.
Larger employers have already started shifting costs. Among firms with 200 or more workers, KFF found that 44% increased the share of the premium workers pay and 21% increased deductibles or other cost sharing in response to higher projected costs.
What this means for employers: KFF data reflects 2026 averages, and each group’s 2027 renewal depends on its own claims, demographics, carrier, and funding arrangement. Employers that compare their renewal and contribution strategy against current benchmarks with a SandStone advisor can make more informed decisions before enrollment opens.
2027 ACA Affordability Percentage and Employer Mandate Penalties
The ACA affordability percentage sets the most an applicable large employer, generally an employer with 50 or more full-time employees including full-time equivalents, can ask an employee to pay for the lowest-cost self-only plan that provides minimum value. IRS Revenue Procedure 2026-26 sets this required contribution percentage at 10.22% for plan years beginning in calendar year 2027, up from 9.96% for 2026.
Because employers rarely know an employee’s household income, IRS rules allow three safe harbors that measure affordability against Form W-2 wages, an employee’s rate of pay, or the federal poverty line.
The cost of missing the mark also rises. IRS Revenue Procedure 2026-22 sets the 2027 employer shared responsibility payment amounts at $3,780 and $5,670.
According to the IRS, the $3,780 amount under Section 4980H(a) applies when an applicable large employer offers coverage to fewer than 95% of its full-time employees and their dependents and at least one full-time employee receives a premium tax credit; the IRS bases that payment on the employer’s full-time workforce, minus 30 employees.
The $5,670 amount under Section 4980H(b) applies for each full-time employee who receives a premium tax credit because the employer did not offer that employee coverage or because the coverage it offered was unaffordable or lacked minimum value. For 2026, IRS Revenue Procedure 2025-26 sets those amounts at $3,340 and $5,010.
What this means for employers: The higher percentage gives applicable large employers slightly more room in setting 2027 employee contributions, but only if the contribution passes a safe harbor test for each full-time employee. Run the affordability calculation against the lowest-paid eligible employees before locking in rates.
2027 HSA Contribution Limits and HDHP Requirements
A health savings account, or HSA, lets employees set aside pre-tax dollars for qualified medical expenses, but only when they enroll in a qualifying high-deductible health plan, or HDHP. The IRS adjusts both the HSA limits and the HDHP rules each year. IRS Revenue Procedure 2026-24 sets the following amounts for calendar year 2027:
-
HSA contribution limit: $4,500 for self-only coverage (up from $4,400) and $9,000 for family coverage (up from $8,750).
-
HDHP minimum annual deductible: $1,750 for self-only coverage and $3,500 for family coverage.
-
HDHP maximum out-of-pocket expenses: $8,700 for self-only coverage and $17,400 for family coverage. This cap includes deductibles, copays, and other cost sharing, but not premiums.
-
Excepted benefit HRA: Employers may make up to $2,250 newly available for plan years beginning in 2027.
Employees age 55 or older can still add a $1,000 catch-up contribution, an amount the Internal Revenue Code sets by statute rather than adjusting for inflation. Employer and employee contributions together count toward the annual HSA limit.
KFF’s 2026 survey also shows why many employers keep an HSA-qualified option on the menu. KFF reports average HSA-qualified plan premiums of $8,989 for single coverage and $26,450 for family coverage, both below the overall averages, and an average worker contribution for family coverage of $6,211 compared with $7,471 across all plans.
What this means for employers: An HDHP that falls outside the 2027 deductible or out-of-pocket thresholds can cost employees their HSA eligibility. Employers should confirm 2027 plan designs with their benefits advisor and carrier and update payroll systems to the new contribution limits before January 1.
How the One Big Beautiful Bill Act Expands HSA Eligibility
The One Big Beautiful Bill Act, which became law on July 4, 2025, made several permanent changes to HSA rules. IRS Notice 2026-5 explains how the IRS applies them:
-
Telehealth before the deductible: The law permanently allows an HDHP to cover telehealth and other remote care services before the employee meets the deductible without disrupting HSA eligibility. According to the IRS, this relief does not extend to in-person services, medical equipment, or drugs that a provider furnishes along with a telehealth visit.
-
Direct primary care: Starting in 2026, an otherwise eligible employee may enroll in a direct primary care service arrangement, a membership-style arrangement that charges a fixed periodic fee for primary care, and still contribute to an HSA. Rev. Proc. 2026-24 keeps the 2027 fee cap at $150 per month for one individual and $300 per month for arrangements covering more than one individual.
-
Bronze and catastrophic plans: The IRS now treats bronze and catastrophic plans available as individual coverage through an ACA Exchange as HDHPs. Notice 2026-5 states that bronze plans that small employers offer through SHOP coverage generally do not qualify unless they meet the standard HDHP requirements.
-
Notice 2026-5 also clarifies a limit on plan design: an HDHP cannot pay direct primary care membership fees before the deductible and keep its HDHP status.
What this means for employers: These changes open new options, but each carries technical conditions. Employers considering telehealth, direct primary care, or an HSA strategy for 2027 should review plan language with a benefits advisor and the carrier before finalizing enrollment materials.
2027 ACA Out-of-Pocket Maximum
The ACA out-of-pocket maximum caps what an enrollee pays in a year for covered in-network essential health benefits through deductibles, copays, and coinsurance. According to CMS guidance from January 29, 2026, the 2027 maximum annual limitation on cost sharing reaches $12,000 for self-only coverage and $24,000 for other than self-only coverage. CMS describes this as an increase of approximately 13.2% from the 2026 limits of $10,600 and $21,200.
This ACA limit applies to non-grandfathered group health plans. HSA-qualified HDHPs must also stay within the lower IRS cap of $8,700 for self-only coverage and $17,400 for family coverage.
What this means for employers: A higher federal ceiling does not require employers to raise plan out-of-pocket limits. Employers can use the change as a decision point on how much cost sharing to pass to employees and how that choice affects recruiting and retention.
Health FSA and Dependent Care FSA Limits for 2027
A flexible spending account, or FSA, lets employees set aside pre-tax pay for eligible expenses. A health FSA covers medical, dental, and vision costs, while a dependent care FSA covers qualifying child or adult dependent care so employees can work.
-
Health FSA: As of early November 2026, the IRS has not published the 2027 health FSA limit, which typically appears in its annual fall inflation adjustments. For 2026, the IRS set the limit at $3,400 in Revenue Procedure 2025-32, as it announced in news release IR-2025-103. Employers should confirm the official 2027 figure before finalizing enrollment materials.
-
Dependent care FSA: The One Big Beautiful Bill Act raised the annual exclusion for dependent care assistance to $7,500 ($3,750 for married individuals filing separately), starting in 2026, under Section 129 of the Internal Revenue Code. The law does not index this amount for inflation, so it stays at $7,500 for 2027.
What this means for employers: Employers that kept the dependent care FSA at the former $5,000 limit for 2026 may want to revisit that choice for 2027. Adopting the higher limit may require plan document updates and attention to nondiscrimination testing.
Open Enrollment Checklist for the 2027 Plan Year
Employers can use the steps below to prepare for enrollment:
-
Benchmark your renewal. Compare contributions and plan designs against current market data before accepting renewal terms.
-
Test affordability. Apply the 10.22% threshold to the lowest-cost self-only plan with minimum value using the safe harbor your organization relies on.
-
Confirm HDHP compliance. Check every HSA-qualified plan against the 2027 minimum deductibles and out-of-pocket maximums in Rev. Proc. 2026-24.
-
Update payroll and administration systems. Load the 2027 HSA limits now, and add the 2027 health FSA limit once the IRS publishes it.
-
Review plan design options. Decide whether to add or adjust telehealth, direct primary care, or a higher dependent care FSA limit, and confirm the requirements with your carrier and plan administrator.
-
Refresh required notices and materials. Update Summaries of Benefits and Coverage, benefit summaries, and contribution charts so employees see accurate 2027 numbers.
-
Communicate early and clearly. Explain premium, deductible, and account changes in plain language so employees can compare options with confidence.
How Employer Health Insurance Costs Vary by State
Premiums and employee contributions differ from one state to the next, so national averages tell only part of the story. According to the Agency for Healthcare Research and Quality’s Medical Expenditure Panel Survey, which KFF compiles in KFF State Health Facts, the average annual single-coverage premium per enrolled employee at private-sector employers reached $9,025 nationwide in 2025, with employees contributing $1,817 of that amount.
State results vary around that national figure, and the KFF State Health Facts tool lets employers look up the 2025 averages for their own state. These figures cover 2025 private-sector single coverage only, so actual 2027 renewals may differ by state, industry, group size, and carrier.
Frequently Asked Questions
When does open enrollment happen for 2027 group health plans?
Open enrollment dates depend on each employer’s plan year. For calendar-year plans, the 2027 plan year begins January 1, 2027, so employers typically hold open enrollment in the final months of 2026. Employers with non-calendar plan years hold enrollment before their own renewal date.
What is the ACA affordability percentage for 2027?
IRS Revenue Procedure 2026-26 sets the ACA affordability percentage at 10.22% for plan years beginning in 2027. Applicable large employers use this percentage to test whether the employee’s cost for the lowest-cost self-only plan with minimum value counts as affordable.
What is the 2027 HSA contribution limit?
According to IRS Revenue Procedure 2026-24, the 2027 HSA contribution limit is $4,500 for self-only HDHP coverage and $9,000 for family HDHP coverage. Employees age 55 or older can contribute an additional $1,000.
What is the ACA out-of-pocket maximum for 2027?
CMS sets the 2027 maximum annual limitation on cost sharing at $12,000 for self-only coverage and $24,000 for other than self-only coverage. HSA-qualified HDHPs must meet the lower IRS limits of $8,700 and $17,400.
Has the IRS announced the 2027 health FSA limit?
As of early November 2026, the IRS has not published the 2027 health FSA limit. The 2026 limit is $3,400 under Revenue Procedure 2025-32. The dependent care FSA limit stays at $7,500 because federal law does not index it for inflation.
Can employees in a direct primary care arrangement contribute to an HSA in 2027?
Yes, in many cases. Under the One Big Beautiful Bill Act and IRS Notice 2026-5, an otherwise eligible employee can enroll in a qualifying direct primary care service arrangement and still contribute to an HSA, as long as monthly fees stay at or below $150 for one individual or $300 for arrangements covering more than one individual in 2027. Employees should confirm eligibility with a benefits advisor before enrolling.
Why Partner With SandStone
Every 2027 limit in the blog affects a real decision: how much employees pay, whether contributions pass the affordability test, and which plans stay HSA-eligible. SandStone Insurance Partners’ Employee and Group Benefits team treats benefits as an ongoing program rather than an annual renewal, using benchmarking data and a carrier-neutral approach to help employers build plans that fit their budget and their workforce.
A SandStone advisor can review your renewal, test affordability, confirm HDHP compliance, and help you communicate changes before enrollment opens. To start your 2027 plan review, call a SandStone advisor at .
Related Coverage
-
Self-funded health plan trends employers should review before renewal
-
No Surprises Act dispute resolution changes for group health plan sponsors
Disclaimer: This blog provides general educational information only and does not constitute legal, tax, financial, or insurance advice. Plan requirements, limits, and coverage vary by state, carrier, plan design, and underwriting, and federal guidance may change after publication. Contact a licensed SandStone advisor to review your specific situation.
