Using An HSA Calculator
Everyone who understands the virtues of a health savings account (including Lively), touts both the triple tax benefits of an HSA, and how much money you can potentially save over the course of a lifetime when making regular maximum contributions.
While this information is useful, it doesn't give you any concrete idea of how much money you can have.
Lively's HSA calculator takes all of your pertinent data, crunches it together, and gives you a much more useful picture of the financial benefits provided by a health savings account.
We've put together a pretty simple and illustrative calculator to help you get a sense for what your HSA can look like - all you need to do is adjust the levers so you can see the impact it will have on your funds over time.
Yearly medical expenses
Years until retirement
Rate of return
Blended tax rate (federal + state)
Using the Lively HSA Balance and Savings Calculator
Standard financial calculators are of limited value when performing complicated computations with many variables. For example, a simple contribution calculator will only show you how much you can deposit into your HSA in a given year.
Interactive calculators, however, are great self-help tools for independent use, because individual circumstances greatly change the rate of return you can expect from your health savings account.
The interactive Lively HSA calculator allows you to change one or all of the variables used to calculate your potential account balance and tax savings, based on your personal situation and desired rates of return.
- Starting balance: The amount you'll have in your health savings account during the first month after it's opened.
- Yearly contributions: The total amount you expect to contribute to your HSA each year; expected contributions can be maximized by sliding the lever all the way to the right, but additional age 55+ catch-up contributions for a family account will not show in the contribution field.
- Yearly medical expenses: The estimated amount you'll pay each year from the HSA for qualified medical and health care costs.
- Years until retirement: How many years you expect to be contributing to your health savings account, until you either start taking Medicare benefits or withdrawing funds after age 65.
- Rate of return: The rate of return you expect to receive on unused funds which rollover from year to year in your HSA; this, of course, depends on how you plan to invest the funds and prevailing market conditions.
- Blended tax rate (federal + state): To get a good idea of how your HSA account will perform, you can enter an estimate in this field based on the total federal and state marginal tax rates you are accustomed to paying. For a more accurate estimate you'll need to sit down with tax rate schedules and your federal and state tax returns, in order to compute your exact blended marginal income tax rate. It will depend on things like your filing status (head of household, married filing jointly or qualified widow, dependents, etc.), adjusted gross income, and so on – and should be adjusted for any increases in income you might reasonably expect over the years you own your HSA.
There's no need to press a "view report" button
On the Lively HSA calculator, it's built to automatically adjust the two important output values, "Potential HSA balance" and "Potential tax savings," as you change your personal finance variables with the sliders.
Those two detailed calculation results aren't guaranteed numbers, of course. Your income, personal situation, rates of return on investment and annual qualified medical expenses will naturally change somewhat as the years pass, meaning your potential balance and tax savings will change as well. The Lively HSA calculator is a fast and easy way to see the dramatic effect a health savings account can have on your finances and retirement savings.
(The Lively HSA calculator is for illustrative purposes only. Any decisions should always be made after consulting qualified professionals who can provide personal finance and investment advice, after learning the complete details of your individual situation and finances.)
Health Savings Account FAQs – in Four Paragraphs
A health savings account allows you to save tax-advantaged money (pre-tax for contributions made from paychecks, tax deductions for direct contributions) to be spent on qualified medical expenses. Those can include most medical, dental and pharmacy bills, co-payments and coinsurance; additionally, you can reimburse yourself from the account for your own medical expenses paid out-of-pocket (expense requirements are quite liberal). This means you're spending "tax-free" money for most medical costs, creating enormous potential tax savings when utilizing an HSA.
There are HSA annual contribution limits; maximum annual contribution amounts depend on whether the account holder has individual or family coverage. There's also a provision allowing additional annual HSA catch-up contributions over the maximum contribution for those over age 55. You can't contribute to your account once you are receiving Medicare Part A benefits.
Your health insurance must be classified as a "high deductible health plan" (HDHP) for you to be HSA-eligible. This insurance coverage type charges lower-than-normal premium payments, but the minimum HDHP deductible amount is high and changes annually.
In 2019, the minimum deductible is at least $1,350 for an individual and $2,700 for a family plan. In 2020, the minimum deductible is $1,400 for individuals and $2,800 for family coverage.
Any unspent balance can be carried over from year-to-year, tax-free. The funds can be spent at any time for the qualified medical expenses of an account holder, or saved for future healthcare expenses in coming years. But here's the real power of an HSA: unused funds can also be invested in stocks, bonds, mutual funds, U.S. Treasury bonds or other instruments of your choice, with profits accumulating tax-free. Any amount of money withdrawn from an HSA for reasons other than your own medical expenses are taxed at your normal federal tax rate, with a 20% penalty added – unless you're 65 or older, when you only pay regular income tax on non-qualified withdrawals.
Calculations above assume contributions are made at end of each year, not beginning. Additionally, this calculator is designed to be informational and educational only. It does not constitute investment or tax advice. We cannot and do not guarantee the applicability of accuracy of the calculator in regard to your individual circumstances. Your contributions, tax savings and future values may vary based on multiple factors, including income and regulatory changes. Please seek the advice of a financial services and tax professional before making any type of investment decision.