The variables used in the simulation are: "SCLUB" = contribution to HSA based on age and income, "SCUB" = gap between contribution and HDHP deductible (which can be negative if
SCLUB exceeds the deductible), and "PREMIUM" = total premium. The total premium is equal to the insurance premium plus the tax-adjusted SCLUB. According to current law, tax deductibility of SCLUB is capped at $2,700 for single coverage and $5,450 for family coverage.
For example, suppose Joe is a single man in the 20% tax bracket who pays $1,500 for the insurance premium and makes a $3,760 annual HSA contribution. His PREMIUM = $1,500 +
($3,760 - $2,700) + $2,700 * (1 - .20) = $4,720.