Health Savings & Out-of-Pocket Healthcare Costs
We developed a unique framework that uses multiple years of claims and demographic data to model yearly out-of-pocket cost ranges. Modest savings and regular investing go a long way.
Card swipes are low for 95% of consumers, yet 95% of HSA holders don't invest their HSA dollars.
Case Study: Zach Friedman
Goal: Invest my HSA balance for retirement medical expenses and understand my likely current healthcare coverage exposure
- Zach, age 40 is enrolled in a typical healthcare plan ($1,500 deductible).
- His likely annual out-of-pocket costs are $200 to $800, approximately $400 on average based on his age, gender, and plan selection.
- Current HSA balance of $20,000 is idle in cash, earning a negative return after inflation.
- With $200/month in HSA contributions, and a 5% real return on his invested balance, he could have $192,000 dollars by the time he is eligible for Medicare. More than enough to offset premiums and copays1https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs.
Modeling HSA Dollars
Your current age
Current Health Plan
Gold plans typically have deductibles of around $1,500, Silver $2,500, and Bronze $4,000. Most are enrolled in Gold or Silver coverage.
Annual out-of-pocket cost scenario based on low (bottom 20%), average, and high (top 5%) users for current health plan and demographic info.
Expected Annual Out-of-Pocket Costs
Expected costs based on age/gender, and current health insurance coverage
Current HSA Balance
Current HSA dollars saved
Annual HSA Contributions
Total dollars from you and your employer. $1,000 to $3,000 are the typical ranges. IRS has 2021 contributions caps for $3,600 for those under 55, and $4,600 for >55. Family contribution limits are 2x higher.
New dollars available for HSA investment, net of modeled out-of-pocket costs
Long-Term Growth in HSA Contributions
Assumed annual increase in HSA investment contributions from now till age 65 (Medicare eligibility)
Real Annual HSA Return
Real rate of return (after assumed healthcare inflation of 4.5%)
In 5 Yrs
In 10 Yrs
*doesn't reflect tax savings