HSA Future Value Calculator
This calculator will help you discover the future value of your Health Savings Account (HSA). First enter your average annual contribution and any annual withdrawals you can make for qualified medical expenses. Then provide a number of years to accumulate, as well as the federal tax percentage, state tax percentage (if applicable), and an estimated percent rate of return on the HSA.
Press CALCULATE, and you’ll receive a detailed breakdown of your HSA.
Reference: For a full description of HSAs please refer to U.S. Treasury - Health Savings Accounts (HSAs).
What's the Future Value of Your Health Savings Account?
Many employers are encouraging employees to opt into a high-deductible health plan (HDHP) with company contributions to a health savings account (HSA).
The rules surrounding HSAs and HDHPs can be confusing when you don't understand them. What happens if someone gets sick? Will it wipe out my account? Can I deposit extra into my account? Are they better than a flex spending account?
These are common questions asked about HSAs and high-deductible health insurance plans.
What is an HSA?
An HSA is an account used in conjunction with a high-deductible health insurance plan. You can use the money saved in the account to pay for qualified healthcare expenses as you incur them.
Eligible medical expenses include:
- health plan deductibles
- vision expenses (including contacts and glasses)
- dental expenses (including braces)
- prescription drugs
- certain medical equipment
An HSA requires a high deductible health insurance plan to receive the tax benefits. The IRS requires these plans to have a minimum annual deductible of $1,250 for individuals and $2,500 for families.
Once you meet the deductible, most plans cover medical expenses at 100 percent. Every plan has a maximum out-of-pocket expense for the policyholder before the plan pays 100 percent. This means that a catastrophic illness cannot wipeout your account if the balance exceeds your annual out-of-pocket expense.
You May Deposit Maximum Allowable Annual Contributions
You can contribute to an HSA account up to the annual maximum. This means if your employer does not contribute the maximum, you may deposit into the account up to the maximum allowable by the IRS for the tax year.
Historically, the amount has increased yearly. In 2014, the maximum amount you could contribute was $3,300 for an individual and $6,550 for a family.
Are HSAs Better Than Flexible Spending Accounts?
Yes, they are. You have full control of the account, and money saved will not expire at year-end like in a flex spending account. If you don't use the money in an HSA, it carries over and eventually can supplement income at retirement age.
The money saved in the plan is not taxed when it goes into the account or when it comes out of the account as long as you use it for qualified expenses, and interest earned is also not taxed. These accounts have a triple tax advantage.
Future Values of a Health Savings Account Can Be Significant
The future value of your health savings account adds up quickly, especially if you do not have excessive medical expenses year after year.
If an individual puts the maximum amount of $3,300 into their HSA account for five consecutive years and has only $1,000 a year in medical expenses for a total of $5,000, the future account value would be estimated at $13,340.00 with a tax savings of $608.65. Use a future account value calculator to estimate what your savings would be with an HSA account.
The calculator determines your future account value using the amount of contributions, less the qualified expenses, multiplied by the number of contribution years. From there it takes into account your tax rate, the state income tax rate, estimated earnings on the principal amount, and estimated tax savings as variables to estimate the future account value.
HSA Accounts Can Significantly Reduce Taxes
Tax savings with HSA accounts add up quickly. For a single taxpayer making $40,000 per year, a $500 contribution to an HSA account can save $75.00 in taxes. Use an HSA tax savings calculator to see what your savings would be contributing to an HSA.
HSAs and High-Deductible Health Plans are not Always the Best Choice
Your out-of-pocket maximums are governed by the health plan and usually do not exceed $6,000 maximum for a family. If you contribute less than the maximum amount annually to the plan, it could take several years for an account balance to equal the maximum out-of-pocket contributions, meaning you will be responsible for the additional amount not saved.
If you are expecting large health expenses on an annual basis and cannot contribute your maximum out-of-pocket expenses to the account, an HSA and HDHP might not be your best choices.
The Bottom Line
These plans are great when you add to them on an annual basis and allow the account value to accumulate. At retirement, you can use them to supplement Medicare expenses and income at a taxed rate similar to an IRA. You can also transfer them to a surviving spouse in the event of your death with no tax consequences.
If you do not have excessive medical expenses, HSAs and HDHPs are great choices.
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