Open Enrollment 2027: A Guide to What You Actually Need to Know
Open enrollment can feel like a chore. The good news: for most of us, it comes down to one or two decisions.
The Fork in the Road: HDHP or Traditional Plan?
The biggest decision for most people: do you want an HSA-eligible plan or not? That single choice determines everything else: your deductible, out-of-pocket maximum, and which tax-advantaged accounts you can use.
In 2027, a plan qualifies as a High-Deductible Health Plan (HDHP) if it meets these IRS minimums:
Self-only coverage: at least $1,750 deductible / $8,700 out-of-pocket max
Family coverage: at least $3,500 deductible / $17,400 out-of-pocket max
HDHPs tend to work well if you are:
Relatively healthy with low routine healthcare utilization
Younger and building long-term savings
Able to cover a higher deductible out of pocket if needed
A traditional plan may be the better fit if you:
Have chronic conditions or take regular prescriptions
Have a family with frequent medical needs
Prefer lower, more predictable out-of-pocket costs
HDHPs often come with lower monthly premiums, but you're trading that savings for a higher deductible and more exposure in a bad year. Traditional plans cost more each month and offer more predictability. Neither is wrong; it depends on how much risk you're comfortable carrying.
If You Choose an HDHP: Open or Fund Your HSA
A Health Savings Account is the most powerful tax-advantaged account most people never fully use. Here's why it deserves your attention: The triple tax advantage.
Contributions go in pre-tax
Your money grows tax-free
Qualified withdrawals are tax-free
No other account does all three.
2027 HSA contribution limits:
Self-only coverage: up to $4,500 / $5,500 if you are 55+ (it includes a catch-up contribution)
Family coverage: up to $9,000 / $10,000 if you are 55+ (it includes a catch-up contribution)
A few things worth knowing:
Your employer's contributions count toward the limit. If your employer puts in $1,000, you can contribute up to $3,500 more on the self-only plan.
The money is yours, forever. Unlike an FSA, HSA funds roll over indefinitely and stay with you if you change jobs or retire.
You can invest it. Once your balance reaches your plan's threshold, most HSA providers let you invest the funds in your account. See Asad's post "How to Use a Health Savings Account (HSA) as a Retirement Tool" for more info.
A general-purpose FSA blocks HSA contributions, and that includes your spouse's FSA if it can pay your bills. A limited-purpose FSA, for dental and vision, works alongside an HSA.
Medicare ends HSA contributions. Plan around it.
Non-medical withdrawals before 65 are taxed as ordinary income plus a 20% penalty. After 65, the penalty goes away, but the income tax remains.
If you are inheriting an HSA from a parent or anyone other than a spouse, expect the full balance to be taxable as ordinary income in the year of the account holder's death. There is no stretch option.
If You Choose a Traditional Plan: Use Your FSA
If an HDHP isn't right for you, a Flexible Spending Account (FSA) still gives you a meaningful tax break on healthcare spending. Your FSA contributions are deducted from your paycheck before taxes, reducing your taxable income for the year, so every dollar you put in costs you less than a dollar out of pocket. The 2027 FSA contribution limit has not yet been announced by the IRS, so watch for that during this month, but for context, the 2026 limit was $3,400.
The key difference to keep in mind: FSA funds generally don't roll over. Most plans offer a limited carryover or a short grace period, but the "use it or lose it" rule is real. The trick is to estimate your annual healthcare spending honestly including copays, prescriptions, dental, vision, and elect accordingly.
Also worth noting: a Dependent Care FSA is entirely separate and lets you set aside pre-tax dollars for childcare or elder care. That limit is not tied to your health plan choice.
HSA vs. FSA: Side by Side
HSA | FSA | |
Requires HDHP? | Yes | No |
2027 Limit | $4,500 / $9,000 | TBD (2026: $3,400) |
Rolls Over? | Yes, indefinitely | Limited |
Portable? | Yes | Generally no |
Invest the Funds? | Yes | No |
Funds Available | As contributed | Full election upfront |
Your 2027 Open Enrollment Checklist
Understand your plan deductible and maximum out-of-pocket amounts
Confirm whether your employer's health plan qualifies as an HDHP under the new 2027 thresholds
Decide: HDHP + HSA, or traditional plan + FSA?
Set your HSA payroll contribution
Estimate your FSA election carefully to avoid forfeiting unspent funds
Check if your employer offers a Dependent Care FSA
If you're 55 or older, remember your $1,000 HSA catch-up contribution
Questions about how your benefits choices fit into your broader financial plan? That's exactly what we're here for. Reach out to the AG Wealth Management team. We're happy to walk through it with you.
— Leslie Rea, MBA, CFP®, MCEP® · AG Wealth Management
General education only. Not investment, tax, or legal advice. Not a recommendation to buy or sell any security. Reading this post does not create an advisory relationship. AG Wealth Management, PLLC is a fee-only registered investment adviser and a fiduciary to its clients. Registration does not imply a certain level of skill or training. Consult your financial advisor (and tax or legal professionals as needed) before acting. Form ADV: adviserinfo.sec.gov.
