Family expense management

Tom is married and has three children. He has a good salary but the family still needs to search out savings where they can. Tom decides to put $500 per month ($6,000/year) into his HSA. He is in a 28% tax bracket.

Tom's family saves $1,680 in taxes in the first year.

Because his High Deductible Health Plan covers physicals and routine immunizations for the kids, Tom ends up using $4,000 of his HSA funds to cover the cost of minor surgery to remove a cyst, an at-home blood pressure monitor, and for prescriptions.

The $2,000 remaining in his HSA at the end of the year (plus any interest earned) rolls over to the next year.

Tom and his wife figure if they can stay on top of their preventive care for the family, with the tax savings, rollover of HSA funds and interest that they've earned, this may give them an extra cushion for health care in retirement.