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.