Financial Tools

HSA Calculator

A health savings account is the only account in the tax code that is untaxed going in, growing and coming out. This projects the balance and puts it against saving the same take-home pay in a taxable account instead.

Contributions

Balance Today

Your Contribution (per year, through payroll)

Employer Contribution (per year)

Annual Contribution Limit (0 to ignore. The IRS sets this each year, enter the current figure)

Medical Spending From the Account (per year, leave at 0 to invest it all)

Assumptions

Years

Annual Return (percent)

Your Income Tax Rate (percent)

Tax on Gains in a Taxable Account (percent, for the comparison)

Values shown are examples. The contribution limit and the catch-up are re-indexed every year, which is why the limit is a field and not a constant. An HSA needs a qualifying high deductible health plan.

See your full report

The Account

Balance at the End	$0
Contributed	$0
Of That, From Your Employer	$0
Investment Growth	$0

Same Money in a Taxable Account	$0
What the Tax Treatment Is Worth	$0
Income Tax Saved on Contributions	$0
Payroll Tax Also Skipped	$0

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For illustration only, not financial advice. Results are estimates based on the numbers you enter and do not constitute an offer, rate quote or approval.

How this is worked out

Contributions go in before income tax, growth is untaxed, and a withdrawal for a qualified medical expense is untaxed. No other account in the code does all three (26 U.S.C. 223).

The comparison line takes the same take-home pay, reduced by your income tax rate because a taxable contribution is made with after-tax money, invests it at the same return, and taxes the growth each year at the rate you entered. The difference between the two is what the tax treatment is worth.

Contributions made through payroll also skip Social Security and Medicare, another 7.65%, which is shown separately because no 401(k) or IRA offers it. The annual limit is re-indexed every year and is therefore a field, not a constant.

Questions people ask

What if I withdraw for something that is not medical?

Before 65 it is taxed as income plus a 20% penalty. From 65 the penalty goes away and it is simply taxed as income, which makes the account behave like a traditional IRA at that point.

Do I have to spend it in the same year?

No. Unlike a flexible spending account, the balance rolls over indefinitely, which is what makes investing it possible.

Can I reimburse myself years later?

Yes, for expenses incurred after the account was opened, with no deadline. Keep the receipts. Paying medical costs from cash today and reimbursing yourself in twenty years leaves the money invested the whole time.

What do I need to qualify?

A qualifying high deductible health plan, and no other disqualifying coverage. Enrolment in Medicare ends the ability to contribute.

Is an HSA better than a 401(k) match?

No. Take the full employer match first, that is an immediate return no tax treatment beats. The HSA is usually the next dollar after it.

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