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Health Savings Account (HSA) Goal Calculator |
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Are you looking at the Health Savings Account (HSA) as a retirement account? Do you have an amount in mind that you want to carry over into retirement? This calculator will help you determine what you need to do in order to reach your goal.
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Definitions
- Health Savings Account (HSA)
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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 HDHP 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".
- How much do you want to carry into retirement?
- The amount you wish to have in your HSA account when you retire.
- 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.
- What is the balance in your HSA?
- The total amount currently saved in your HSA.
- How much do you expect to spend on healthcare per month?
- The amount per month you expect to spend on qualifying medical expenses.
- 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.
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