Consider and take appropriate action to approve the employee annual contribution limits for the Flexible Spending Account (FSA) for Health Care and Dependent Care for Fiscal Year 2027 and the Health Savings Account (HSA) for Calendar Year 2027:

Staff Report & Agenda Item Details

In IRS Revenue Procedure 2025-32 released on October 9, 2025, the IRS announced an increase in the amount that may be deducted from an employee’s pay for Healthcare FSAs. The limit for plans beginning on or after January 1, 2026, will be $3,400, which is an increase of $100 from the previous limit of $3,300. Additionally, the IRS increased the Dependent Care FSA maximum contribution to $7,500 per household, which is an increase of $2,500 from the previous limit of $5,000.<br><br data-pasted="true">In IRS Revenue Procedure 2026-24 released on May 29, 2026, the IRS announced the 2027 inflation-adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code. For calendar year 2027, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $4,500 ($100 increase), and for an individual with family coverage under a high-deductible health plan is $9,000 ($250 increase).