2026 HSA Limits Are Here—Is Your Plan Legally Tuned Up?

By April Handlir, Compliance Manager, EHD

The IRS has released the 2026 HSA and HDHP limits, and while the numbers are rising, so are your compliance responsibilities. Whether you’re updating plan documents, prepping for open enrollment, or reviewing deductible structures, here’s what you need to know to stay compliant—and avoid disqualifying your HSA plan.

HSA & HDHP Limits: 2025 vs. 2026

 What Plan Documents Should Say

• Eligibility & Contributions: Update your SPD and plan documents to reflect the new 2026 limits. Employees can legally adjust their HSA contribution amounts at any time throughout the year—not just during open enrollment. However, employers may implement reasonable administrative guidelines (such as limiting changes to once per month or per pay period) to streamline processing. Be sure to clearly communicate any such restrictions in your plan materials to avoid confusion and ensure compliance.
• Cafeteria Plans (Section 125): Ensure salary reduction agreements align with the updated HSA limits. Indicate the mid-year election change process for HSA contributions. All other employee contributions outside of a QLE cannot be changed mid-year.
• HDHP Definitions: Confirm your plan design meets IRS requirements. Understand an embedded vs an aggregated deductible and how this impacts the compliance of the plan.

• Self-only coverage must have a minimum deductible of $1,700.
• Family coverage must have a minimum deductible of $3,400, regardless of structure.
• If using an embedded deductible, each individual must meet a $3,400 minimum deductible before benefits are paid to remain HSA-eligible.
• Notices: Communicate the new limits to employees during open enrollment or annual benefits updates. EHD will have a limits sheet released closer to the 4^th quarter.

Educate Employees on these Surprising Restrictions

• No Double-Dipping: If the employee or their spouse is enrolled in a general-purpose FSA, neither can contribute to an HSA—even if only one is covered by the FSA 
• LPFSA Is Okay: A Limited Purpose FSA (LPFSA)—which only covers dental and vision—is HSA-compatible. The employee and their spouse can be enrolled in one and still contribute to an HSA.
• One Household, One Limit: The $8,750 family contribution limit (plus $1,000 catch-up if age 55+) is a combined cap for both spouses—even if they each have an HSA. They can both contribute to the catch-up contribution if they have their own HSA account. The employer contribution if applicable goes towards the total annual limit.
•  VA Benefits Can Pause Contributions: If an employee has received VA medical care or prescriptions in the past 3 months, they are temporarily ineligible to contribute to their HSA—unless the care was for a service-connected disability. 
• Medicare = No More Contributions: Once the employee is enrolled in any part of Medicare, they can no longer contribute to their HSA. But they can still use the funds tax-free for qualified expenses from their HSA account. If
• No Excise Tax After 65: After age 65, the employee can use HSA funds for non-medical expenses without paying the 20% excise tax. They will still owe regular income tax on those withdrawals, but it’s treated just like a traditional IRA.
• Other Oddities:
  • The employee must be covered by a qualified HDHP—and not by any other disqualifying coverage (like Tricare or a spouse’s employer plan).
  • The employee cannot be claimed as a dependent on someone else’s tax return.
  • Contributions made after the employee loses HSA eligibility (e.g., due to Medicare or FSA enrollment) may be subject to taxes and penalties.

HSA compliance isn’t just about contribution limits—it’s about plan design, documentation, and structure. A small oversight, like an embedded deductible or other coverage, can disqualify your entire plan or an employee’s direct plan. There are a lot of rules that must be followed to remain compliant with a QHDHP. Review now, adjust early, and communicate clearly with your employees.