How does the math for HSA Limits work ?

Submitted by Peggy Fisher on Thu, 2014-06-12 15:36

If the 2015 annual contribution limit for an individual with self-only coverage under a High Deductible Health Plan is $3,350. And the deductible is not less than $1,350. And the maximum out of pocket expenses must not exceed $6,450 for self-only coverage… could the math look like this during the first year if you were to get very sick right off the bat. $3,350 contribution. $1,300 out of pocket deductible met before accessing the $3,350 and then you still need and additional $3,100 before you maximum out of pocket, expense is met? Meaning you really would need $9,050 your first year? How does the math look?



Submitted by Alan - IRA critic on Thu, 2014-06-12 16:27

  • The HSA can be tapped to cover the deductible and any other out of pocket expenses. So if co pays and the deductible added up to 3350, the HSA contribution could be distributed to pay those expenses. That would leave a total cost of just 3350 for the contribution.
  • Another example would be a very large bill of 20k. In this case, the HSA contribution could be distributed to pay 3350 of that cost. The plan would pay everything in excess of 6450 or whatever lower out of pocket max the plan has. Total cost for individual would be 3350 for the contribution and if the plan had the max out of pocket limit of 6450 then 6450 less 3350 would also be due. That is 3100 and total cost would be 6450. If there was no HSA distribution perhaps because the cost was high enough to itemize, then the out of pocket would be 6450 plud 3350 or 9800, but their HSA would still have a balance of 3350.
  • Bottom line is that the HSA can be used to cover any deductibles or out of pocket expenses not paid by the HSA compliant plan.

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