The Number One Question About Health Savings Accounts

Created April 30th, 2010 by HDHPexpert                                                                              Print

What is the number one question about Health Savings Accounts (HSAs)?

Do HSA funds expire are the end of the year?

NO!  HSA funds roll over each and every year, building interest and never expiring.  There is no “use it or lose it” policy as there is with FSAs (flexible spending accounts) and some HRA (health reiumbursement account) arrangements.

HSA funds are 100% owned and controlled by the individual who established them.  They rollover indefinitely. 

I Have an HSA: How Does This Save Me Money? ($20,000 Salary)

Created April 29th, 2010 by HDHPexpert                                                                              Print

This example uses an annual salary of $20,000.

$20,000 Salary Example - $30,000 Salary Example - $40,000 Salary Example

Jack earns $20,000 annually and has out-of-pocket costs for medical office visits and one supply of a generic drug each month. He also plans to purchase new glasses/contacts. These costs total approximately $1500 each year.

Without Health Savings Account

All money spent on healthcare expenses is post-tax.

With Health Savings Account

+$500!

Additional Benefit: HSA money not used is available next year.

Jack has increased his take home pay by $500 per year ($42 monthly) by participating in a Health Savings Account. How is this possible? Jack has decreased his taxable pay while also putting himself in a lower tax bracket. He could potentially have $500 more to spend because he is not paying for his medical expenses with money that has been taxed by the government.

I Have an HSA: How Does This Save Me Money? ($40,000 Salary)

Created April 29th, 2010 by HDHPexpert                                                                              Print

This example uses an annual salary of $40,000.

$20,000 Salary Example - $30,000 Salary Example - $40,000 Salary Example

Elizabeth earns $40,000 annually and has out of pocket costs for medical office visits, one scheduled surgery and one supply of a generic drug each month.  She also plans to purchase new glasses/contacts.  Elizabeth’s projected total medical expenses for the year total $2500.   

Without Health Savings Account

All money spent on healthcare expenses is post-tax.  

With Health Savings Account

+$1000!

Additional Benefit: HSA money not used is available next year.  

Elizabeth has increased her take home pay by $1000 per year ($83 monthly) by participating in a Health Savings Account. How is this possible? Elizabeth has decreased her taxable pay while also putting herself in a lower tax bracket. She could potentially have $1000 more to spend because she is not paying for her medical expenses with money that has been taxed by the government.