Definitions

Health Savings Account (HSA)

An HSA is a tax-advantaged account established to pay for qualified medical expenses of an account holder 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 2013, for a HDHP, the minimum deductible amount is $1,250 for self-only coverage and $2,500 for family coverage. A HDHP must also have a maximum out-of-pocket expense per year. For 2013, this maximum is $6,250 for self only coverage and $12,500 for family coverage. This maximum does not include the cost of the insurance premiums.

Please note, you are no longer eligible to make HSA contributions starting in the first month that you are eligible for and enrolled in Medicare Part A or B.

For complete details on HSAs you may wish to visit the U.S. Treasury at http://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx

High Deductible Health Plan (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 2013, for a HDHP, the minimum deductible amount is $1,250 for self-only coverage and $2,500 for family coverage.

High Deductible Health Plan (HDHP) coverage type

Choose the insurance coverage type for your HDHP. Your choices are 'Family' or 'Single'.

Current Health Savings Account (HSA) balance

The total amount currently saved in your HSA.

Monthly Health Savings Account (HSA) contribution

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.

Monthly heathcare expenses

The amount per month you expect to spend on qualifying medical expenses.

Years 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 dependent on the types of investments you select. The S&P 500 for the 10 years ending Dec. 31st, 2012 had an annual compounded rate of return of 7.1%, including reinvestment of dividends. From January 1970 through the end of 2012, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 10.1% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a bank may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and 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

This is what you expect for the average long-term inflation rate. A common measure of inflation in the US is the Consumer Price Index (CPI). From 1925 through 2012, the CPI has a long-term average of 3.0% annually. Over the last 40 years, the highest CPI recorded was 13.5% in 1980.

Marginal income tax rate

Your marginal tax rate is used to calculate your potential tax savings. We assume that all contributions receive a tax deduction at the tax rate you enter here. Use the table below to assist you in determining your marginal income tax rate.Use the table below to assist you in estimating your Federal 2013 tax rate.

Filing Status and Income Tax Rates 2013*
Tax Rate	Married Filing Jointly or Qualified Widow(er)	Single	Head of Household	Married Filing Separately
10%	$0 - $17,850	$0 - $8,925	$0 - $12,750	$0 - $8,925
15%	$17,850 - $72,500	$8,925 - $36,250	$12,750 - $48,600	$8,925 - $36,250
25%	$72,500 - $146,400	$36,250 - $87,850	$48,600 - $125,450	$36,250 - $73,200
28%	$146,400 - $223,050	$87,850 - $183,250	$125,450 - $203,150	$73,200 - $111,525
33%	$223,050 - $398,350	$183,250 - $398,350	$203,150 - $398,350	$111,525 - $199,175
35%	$398,350 - $450,000	$398,350 - $400,000	$398,350 - $425,000	$199,175 - $225,000
39.6%	over $450,000	over $400,000	over $425,000	over $225,000
*Caution: Do not use these tax rate schedules to figure 2012 taxes. Use only to figure 2013 estimates. Source: 2013 preliminary tax brackets subject to correction http://www.irs.gov