How can switching from your traditional insurance plan to a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) save you money? Take a look at the chart below.
In this example, a family had a traditional health insurance policy with a $1000 deductible. This family switched to a HDHP with a $5150 deductible and then put $5150 into their HSA.
At the end of the year, they saved more than $600 and still had more than $2900 in their HSA to cover future medical expenses for a total savings of almost $3000 in one year.
| Sample Comparison of Traditional vs HDHP with an HSA |
Traditional Plan |
HDHP + HSA |
| Deductible |
$1000.00 |
$5150.00 |
| Coinsurance |
80%/20% |
100% |
| Adding Expenses: |
|
|
| Annual Premium |
$6804.00 |
$4501.20 |
| Out-of-Pocket Costs to Cover Deductible |
$1400.00 |
NA |
| Out-of-Pocket Costs to Cover Coinsurance |
$ 800.00 |
NA |
| HSA Qualified Expenses |
NA |
$2200.00 |
| Unused HSA Contribution (Assuming $5150 Contribution) |
NA |
$2950.00 |
| Expenses Subtotal: |
$9004.00 |
$9651.20 |
| Subtracting Tax Savings |
|
|
Savings: HSA Contribution Tax Reduction for Current Year*
Multiply HSA contribution by tax rate to realize tax savings and subtract from the HSA expense subtotal |
$5150.00
X .25
$1287.50 |
$9651.20
-($1287.50)
$8363.70 |
| NET EXPENSES FOR CURRENT PLAN YEAR |
$9004.00 |
$8363.70 |
| FUNDS AVAILABLE FOR NEXT PLAN YEAR THROUGH HSA* |
$2950.00 |
* Consult your tax adviser regarding the tax benefits of an HSA for your particular situation.
* Your HSA will also have some interest growth.
