Your seeking ways to save money, and you’ve been thinking about the Health Savings Account partnered with a high deductible health plan. You hear about all the tax benefits you would receive and – but really, how does it work?
Some brief History:
Under the Medicare Modernization Act of 2003, tax exempted benefits for health related costs were offered. This tax exclusion is very substantial – money that went to the government before is saved in your pockets!
But where do the number really add up?
Get ready because it’s time to get our hands dirty with some math comparisons – (don’t worry, in the end you’ll save!)
Take one employer who does not provide health insurance, and another that does.
Employer that does Employer that
not provide provides
$50,000 Your Gross Income $50,000
$0 Health Insurance Premium
Paid by employer $4000
Paid by you $1000
$50,000 Your Salary after paying insurance $45,000
$17,500 Employee taxed (35%) $15,750
$32,500 Your Salary after Taxes $29,250
$5,000 Individual Health Insurance Policy $0
$27,500 Money Available for you to spend on anything $29,250
*You save $1,750
That wasn’t so bad right?
So there is some mathematical proof of how you can save money using a health savings account. Our advice, take the time and look at your finances, and see if you are reaping the benefits of your Health Savings Account. Keep track of all your finances like this and you could even save money doing your taxes as well!