Health Savings Account Evaluator - 2019 Calculator

Alerts and notices

This calculator compares the costs of a traditional health plan to a qualified high deductible health plan together with a health savings account. The amount in the Net savings this year field indicates the difference between the two options.

A health savings account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses.

A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.

Benefits of an HSA

  • You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize your deductions on Form 1040.
  • Contributions to your HSA made by your employer (including contributions made through a cafeteria plan) may be excluded from your gross income.
  • The contributions remain in your account until you use them.
  • The interest or other earnings on the assets in the account are tax free.
  • Distributions may be tax free if you pay qualified medical expenses.
  • An HSA is “portable.” It stays with you if you change employers or leave the work force.

To be an eligible individual and qualify for an HSA, you must meet the following requirements.

  • You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
  • You cannot be enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else's tax return.
  • Each spouse who is an eligible individual who wants an HSA must open a separate HSA. You cannot have a joint HSA.

High deductible health plan (HDHP)

  • Has a higher annual deductible than typical health plans, and
  • Has a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses. Out-of-pocket expenses include copayments and other amounts, but do not include premiums.

Example

What will a couple save annually if they are considering adding an HSA to a plan set up as a High Deductible Healthcare Plan? In this example, the couple is expecting their first child late next year.

Note: The particular plan has a (3,000 individual / 6,000 family) deductible.

Field Traditional Plan HSA Plan
Plan coverage Family Family
Annual deductible $700.00 $2,100.00
Medical costs applied to annual deductible $700.00 $2,100.00
Co-payments and co-insurance after deductible is met $2,300.00 $2,900.00
Monthly taxpayer insurance premium $290.45 $102.60
Insurance premium exempt from FICA tax? Yes Yes
Insurance premium exempt from income tax? Yes Yes
Employer contribution to HSA $1,000
Taxpayer contribution to HSA (exempt from income tax) $2,100
Taxpayer contribution from a section 125 cafeteria plan? No
Federal tax rate 25.00% 25.00%
State tax rate 4.00% 4.00%
State tax deducted on federal return? Yes Yes

In this example, the couple will save $1,199.24 by using the HSA plan.

Note: The medical costs applied to the annual deductible cannot exceed the annual deductible.

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