Employers that offer company-sponsored Health Savings Accounts (HSAs), High-Deductible Health Plans (HDHPs), Health Reimbursement Arrangements (HRAs), Flexible Spending Accounts (FSAs), and transportation benefits should take steps now to ensure that the updated 2026 IRS limits are accurately reflected in all enrollment materials and employee communications.
If health and welfare benefits are summarized in your employee handbook or benefits policies, those documents should also be reviewed and updated to reflect the new dollar thresholds.
HEALTH SAVINGS ACCOUNTS (HSA) – 2026 CONTRIBUTION LIMITS
For plan years beginning in 2026, the IRS has increased the annual HSA contribution limits as follows:
- Self-only coverage under an HDHP: $4,400 (up from $4,300 in 2025)
- Family coverage under an HDHP: $8,750 (up from $8,550 in 2025)
HIGH-DEDUCTIBLE HEALTH PLAN (HDHP) DEFINITION – 2026
To qualify as an HDHP for 2026, a health plan must meet the following criteria:
- Minimum annual deductible:
- $1,700 for self-only coverage
- $3,400 for family coverage
- Maximum annual out-of-pocket expenses (excluding premiums):
- $8,500 for self-only coverage
- $17,000 for family coverage
EXCEPTED-BENEFIT HRA LIMIT
For 2026, the excepted-benefit HRA annual limit increases to $2,200, up from $2,150 in 2025.
FLEXIBLE SPENDING ACCOUNTS (FSA) – NEW IRS LIMITS
The IRS has also announced updated pre-tax limits for Flexible Spending Accounts, which allow employees to reduce taxable income while paying for eligible expenses.
HEALTH CARE FSA
- 2026 annual contribution limit: $3,400 (up from$3,300 in 2025)
Because employees must have access to their full elected amount on the first day of the plan year, some employers choose to set a plan limit below the IRS maximum to reduce the risk of overdrawn accounts if an employee separates mid-year.
- Carryover limit for 2026: Up to $680
- Carryovers are optional
- Employers may set a lower carryover amount or decline to offer a carryover altogether
DEPENDENT CARE FSA
Beginning January 1, 2026, and pursuant to the One Big Beautiful Bill Act, the annual contribution limit increases to:
- $7,500 per household
- $3,750 for married individuals filing separately
Dependent care FSAs may be used for childcare, preschool, elder care, and similar expenses. Unlike health care FSAs, funds are only available as contributions are made. Employers may cap contributions below the IRS maximum if desired.
TRANSPORTATION BENEFITS
For 2026, the monthly limit for qualified transportation fringe benefits, including parking and transit passes, increases to $340 per month, up from $325 in 2025.
EMPLOYER ACTION ITEMS
Employers should proactively review and update:
- Plan documents and summary plan descriptions
- Open enrollment materials
- Payroll and benefits administration systems
- Employee handbooks and benefits policies
When properly communicated, these increased limits can provide meaningful tax savings and budgeting opportunities for employees. Encouraging employees to review anticipated expenses and adjust their benefit elections accordingly will help them maximize the value of these pre-tax programs.
HOW JORGENSENHR CAN HELP
JorgensenHR works with employers of all sizes to navigate the complexities of employee benefits compliance. We assist clients with reviewing plan documents, updating employee handbooks, coordinating with benefits brokers and payroll providers, and ensuring enrollment communications are accurate, compliant, and employee friendly. Our goal is to help employers reduce risk, improve compliance, and deliver benefits programs that are both strategic and easy to administer.
If you have questions about how these 2026 benefit limits impact your organization—or would like assistance updating your policies and communications, we’re here to help.
Please connect with JorgensenHR at:.
📞 661-600-2070
📧 info@jorgensenhr.com
🌐 www.jorgensenhr.com
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