Definitions
- Health Savings Account (HSA)
An HSA is
a tax-advantaged account established to pay for qualified medical expenses
of an accountholder who is covered under a high-deductible health plan.
With money from this account, you pay for healthcare expenses until your
deductible is met. Any unused funds are yours to retain in your HSA and
accumulate towards your future healthcare expenses or your retirement.
In order
to put money into an HSA you are required to have a High Deductible Health
Plan (HDHP) in effect for either you or your family. A HDHP is simply
health insurance that meets certain minimum deductible and maximum out-of-pocket
expense requirements. In 2008, a HDHP has a minimum deductible of $1,100
for self-only coverage and $2,200 for family coverage. A HDHP must also
have a maximum out-of-pocket expense per year, excluding the cost of premiums,
of $5,600 for self only coverage and $11,200 for family coverage.
For complete
details on HSAs you may wish to visit the U.S. Treasury at http://www.treas.gov/offices/public-affairs/hsa/
What
is your deductible amount?
- Your HDHP
deductible amount is the amount you pay toward your own medical expenses,
in a given year, before your insurance begins to cover any expenses.
In 2008, for a HDHP, the minimum deductible amount is $1,100 for self-only
coverage and $2,200 for family coverage.
- What
is your type of HDHP coverage?
Choose
the insurance coverage type for your HDHP. Your choices are "Family"
or "Single".
- What
is the balance in your HSA?
The
total amount currently saved in your HSA.
- How
much will you put into the HSA per month?
-
- The amount
you will contribute each month to your HSA. This calculator assumes
that you make your contribution at the beginning of each month. Your
monthly contributions are limited by the annual maximum allowed. This
calculator doesn't take catch-up contributions into account when calculating
your maximum annual contribution.
- How
much do you expect to spend on healthcare each month?
The
amount per month you expect to spend on qualifying medical expenses.
How
many years do you have to save before retirement?
- The number
of years you will be able to save (contribute) into your HSA before
you retire.
Annual rate of return
- This is
the annual rate of return you expect to receive on your HSA funds. The
actual rate of return is largely dependant on the type of investments
you select. From January 1970 to December 2007, the average compounded
rate of return for the S&P 500, including reinvestment of dividends,
was approximately 11.4% per year (source: www.standardandpoors.com).
During this period, the highest 12-month return was 61%, and the lowest
was -39%. Savings accounts at a bank can pay as little as 1% or less.
It is important to remember that future rates of return
can't be predicted with certainty and that investments that pay higher
rates of return are generally subject to higher risk and volatility.
The actual rate of return on investments can vary widely over time,
especially for long-term investments. This includes the potential
loss of principal on your investment. It is not possible to invest
directly in an index and the compounded rate of return noted above
does not reflect sales charges and other fees that funds and/or investment
companies may charge.
Expected
Inflation Rate
What you
expect for the average long-term inflation rate? A common measure of
inflation in the U.S. is the Consumer Price Index (CPI), which has a
long-term average of 3.1% annually, from 1925 through 2007. The CPI
for 2007 was 2.4%, as reported by the Minneapolis Federal Reserve.
Federal
Tax Rate
-
Your
marginal federal tax rate. Use the table below to help you choose
the appropriate tax rate.
-
| Filing
Status and Income Tax Rates 2008
|
| Tax
rate |
Married
filing jointly
or Qualified Widow(er) |
Single |
Head
of household |
Married
filing separately |
| 10% |
$0 - 16,050 |
$0 - 8,025 |
$0 - $11,450 |
$0 - 8,025 |
| 15%
|
$16,051- 65,100 |
$8,026- 32,550 |
$11,451- 43,650 |
$8,026- 32,550 |
| 25% |
$65,101- 131,450 |
$32,551- 78,850 |
$43,651- 112,650 |
$32,551- 65,725 |
| 28% |
$131,451- 200,300 |
$78,851- 164,550 |
$112,651- 182,400 |
$65,726- 100,150 |
| 33% |
$200,301- 357,700 |
$164,551- 357,700 |
$182,401- 357,700 |
$100,151- 178,850 |
| 35% |
over $357,700 |
over $357,700 |
over $357,700 |
over $178,850 |
|
Source:
http://www.irs.gov/pub/irs-drop/rp-07-66.pdf
|
