I Have an HSA: How Does This Save Me Money? ($40,000 Salary)
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April 29 by:
HDHP Expert
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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
| Gross (taxable) Pay | $40,000 |
| Taxes @ 25% | (-$10,000) |
| Net Take Home | $30,000 |
| Out of Pocket Health Care Costs | $2500 |
| Spendable Take Home | $27,500 |
All money spent on healthcare expenses is post-tax.
With Health Savings Account
| Gross (taxable) Pay | $40,000 |
| Pre-Tax Health Care Deduction | (-$2500) |
| Taxable Pay | $37,500 |
| Taxes @ 24% | (-$9000) |
| Spendable Take Home | $28,500 |
+$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.
