I Have an HSA: How Does This Save Me Money? ($20,000 Salary)
Created
April 29 by:
HDHP Expert
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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
| Gross (taxable) Pay | $20,000 |
| Taxes @ 21% | (-$4200) |
| Net Take Home | $15,800 |
| Out of Pocket Health Care Costs | $1500 |
| Spendable Take Home | $14,300 |
All money spent on healthcare expenses is post-tax.
With Health Savings Account
| Gross (taxable) Pay | $20,000 |
| Pre-Tax Health Care Deduction | (-$1500) |
| Taxable Pay | $18,500 |
| Taxes @ 20% | (-$3700) |
| Spendable Take Home | $14,800 |
+$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.
