How much should you contribute to your Health Savings Account (HSA)? That depends on a variety of factors, each of which will vary between families and individuals. An HSA is meant to be two things at once: A short-term savings account for near-term medical expenses, and a longer-term vehicle to build a substantial sum for future medical expenses. As with most things financial, perhaps the key is balance.

First, begin with the maximums. The most that an individual in 2009 can contribute to an HSA is $2,900, and for a family the max is $5,800. That equates to $241 per month on the individual side, and $483 per month for a family. If you are in a position to contribute the maximum, and do so without getting late on other bills, using credit cards, or cutting back on necessities, consider padding your HSA at the outset so you have a nest egg to draw upon.

For many of us, simply contributing the maximum may not be smart or feasible. In that case, there are a few levers to use as you determine the right amount to contribute:

1. How much do you think you'll use on medical care annually. It makes sense to at least save as much as you expect to use annually on medical care, and if possible more. Remember, an HSA doesn't have a use-it-or-lose-it provision like the more common FSA.
2. How large you want your HSA to become. The easy answer is "as large as possible." Realistically, though, determine if you want your HSA to always have just a bit more than you think you'll need each year, of if you want your HSA to become a nest-egg of sorts for future health care expenses.
3. Time and Interest. Like with any investment, the number of years you are invested for and the expected interest rate will impact the growth of the account balance over time. If you are an aggressive investor, keep in mind that you could just as easily see a 20% drop in value as you could a 40% increase.
4. Your tax rate. The higher tax bracket you are in, the more advantageous a break you'll get on invested HSA dollars.

For more specific analytical help, we recommend you access an online calculator geared specifically toward HSA. The best one we've found so far is this one at Wachovia.

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