What are your goals with this house / how long you plan to own it? What are your utility rates for electric in cents per KWH.

I doubt your heating needs would be worth the extra cost to go to 95% for your area.

Your heating needs are secondary to your cooling needs at your location. An 80% furnace would be fine, if local/state codes permit (California is a little weird). Your furnace is 16 years old and has been working year round (cooling as well as heating). If its been pretty reliable you might consider keeping it but if its required more and more repairs over the last few years, you might just want to replace it. A two stage furnace would only make sense if you need it to operate a 2 stage AC condenser.

"Your furnace is 16 years old and has been working year round (cooling as well as heating)."

No. The OP's air handler has been operating in heating and cooling modes for 16 years. A furnace creates and moves hot air. It operates in heating mode, but not in air conditioning mode. An air conditioner operates only in air conditioning mode, not in heating mode. The OP's air handler may be replaced along with the air conditioner evaporator coil, but not necessarily. The existing furnace unit doesn't have to be replaced, provided it's compatible with the replacement air handler.

" A two stage furnace would only make sense if you need it to operate a 2 stage AC condenser."

Heating and air conditioning systems are designed for heating and air conditioning loads, respectively. A single-stage furnace might be paired with a two-stage air conditioner and a two-stage furnace might be paired with a single stage air conditioner depending on the climate zone, the home's construction, and the owner's objectives.

A furnace creates and moves hot air. It operates in heating mode, but not in air conditioning mode.

A furnace only HVAC system can only operate in heating mode. (gas furnace)

A gas furnace combined with an Evaporator coil, lineset and condensing unit runs in both heating and air conditioning mode with the proper controls installed to do so. The air conditioner uses the blower of the furnace to operate in cooling mode. The furnace in this operation is still a gas furnace.

An air handler? is an electric furnace and evap coil with heat strips or in some cases a heat pump that is capable of heating as well as air conditioning. Heat strips when paired with a heat pump are considered emergency heat or second stage heat when conditions warrant their use.

Some air handlers are heat only, they contain no evap coil -- just a heat kit with resistance heat strips. A heat pump tied to an air handler with heat kit only will not work, you need lineset, evap. coil and proper controls.

I service the Katy, Texas area.

Ray,

A standalone furnace has an integrated air handler. It's typically referred to as a "furnace" or "furnace unit." When a furnace is paired with an air conditioner to create an HVAC system, the unit which moves air in the system is referred to as an "air handler" with the air being heated or cooled by other components in the system. The distinction is important because a furnace operates seasonally and an air handler operates year 'round. An air handler will likely need replacement before the furnace component in an HVAC system.

I know you're fond of using google to investigate stuff. If you'll google "what is the difference between a furnace an an air handler" you'll find lots of readable clarification:

https://www.pickhvac.com/faq/air-handler-vs-furnace/#:~:text=The%20difference%20between%20an%20air%20handler%20and%20a%20furnace%20is,that%20look%20very%20much%20alike.

https://www.ainsworthac.com/whats-the-difference-between-a-furnace-and-an-air-handler/

https://indoortemp.com/resources/difference-between-ac-heat-pump-furnace-air-handler

https://carolinaclimatecontrolsc.com/hvac-tips/the-difference-between-air-handlers-and-furnaces-what-you-need-to-know/

https://yourairexperts.com/blog/air-handlers-vs-furnaces/

https://plainhelp.com/air-handler-vs-furnace/

In order to use google you have to understand "how" to use it, Mr. Ross.

The blower of the furnace is a part of the furnace. AN air handler is an electric furnace.

So if you called a gas furnace an air handler and you ordered one. They would give you an electric furnace or Air handler. But I want a gas air handler? They aren't called that Charles.

You go to the store and say I am looking for a nail whacker. -- The attendant tells you we don't have nail whackers, we have hammers. LOL.

This is why builders should concentrate on buildng, leave HVAC to the pros.

click to enlarge.

Sorry, Ray,

An air handler is the term HVAC engineers use for an air moving device that gets connected to a coil and maybe a furnace unit, too. We get them in boxes which are labeled "air handler" by the manufacturer. Coils come in separate boxes as do furnace units. I'm not endorsing any single manufacturer, but here's what Carrier has to say on the subject:

https://www.carrier.com/residential/en/us/homeowner-resources/hvac-glossary/air-handler/

Even Carrier doesn't call a gas furnace that. Step away from the keyboard Charles.

click to enlarge.

The term "fan coil" is used interchangeably with "air handler," Ray. Time to move on.

Charles never said it wasn't. We are comparing air handler or fan coil to a gas furnace.

Why would they call it a fan coil? Does it not describe what it is?

Same thing with a furnace. It tells you what it is...

A furnace is NOT: an air handler or fan coil either one. That's why they call it a furnace.

Time to move on because Charles can't think of a new argument to get out of his lack of HVAC equipment knowledge. Hey HVAC is easy, anyone can do it.

Ray,

There are adequate links in the post above from a range of sources which describe the difference between a furnace and air handler. Houzzers can choose whichever source they wish to rely on for information. Your posts should come with a disclaimer.

I think we're getting bogged down with semantics (pedantics?) here. Most people use the term "air handler" to describe the blower for a heat pump and the term "furnace" for, well, a furnace regardless of what some manufacturers may call them.

The point is that they are separate components of a system, each with different life expectancies. They can all be replaced at the time the component with the shortest lifetime fails, but need not be.

The distinction is important because a furnace operates seasonally and an air handler operates year 'round. An air handler will likely need replacement before the furnace component in an HVAC system.

These words from the builder tells me he doesn't know half of what he's talking about.

This thread is discussing the need of replacing a "furnace", of that furnace (any furnace) they include a heat exchanger, gas valve, safety controls via a circuit board and a blower motor that runs during the AC cycle when air conditioning is implemented. A furnace or air handler either one does not require an air conditioning mode to operate. A condensing unit (whether AC or heat pump) requires either a furnace and an Evap Coil OR an air handler that typically include a coil -- as in "fan coil".

Some air handlers are just that... an air handler with no coil or heat either one... but this is only going to confuse the builder even more because he's a house builder and NOT and HVAC guy. This goes under the guise of using the "proper tool" for the job.

An furnace operates year round just as much as an 'air handler' would... If the furnace has a call for cooling it will run in cooling mode provided it has the proper parts attached to it.

What voltage is required to operate an air handler? What voltage is required to operate a furnace? Fan coil?

I think we're getting bogged down with semantics (pedantics?) here.

We're having a moment of if it's on the internet it must be true AND Hey! HVAC is easy anyone can do it.

If you search the Carrier glossary... the term "furnace" is missing. Yet they include a picture of one with that term. One can only imagine why they did such a thing. LOL.

Yet Carrier included a definintion for Central Air that Mr. Ross clearly didn't study up on from a recent post in another thread... He's got this habit of posting things he doesn't fully understand.

click to enlarge.

So much fun and my job is so easy when you consider all the misinformation people chase after. They will run to those who claim to know so much at their own detriment.

This topic is in Heating and Air Conditioning -- NOT home building 101 on this forum board. You (as a home owner) should expect to find credible and accurate information.

Jethro Bodine, Merry Christmas. LOL, search long enough from the builder you'll find this reference too as an attack on me. Karma has a way of working things out...

I service the Katy, Texas area.

A heating and air conditioning system for our climate (zone 4) typically consists of three components: an air handler (which some people refer to as a fan-coil unit,) a compressor (either a heat pump or air conditioner) and a gas furnace. The term "furnace" used in this context means a gas-fired heater. In milder climates, electric strip heaters might be used in lieu of a gas furnace or as back up heaters for a heat pump. They are separate components which need to be selected by the system designer to work together as a system (both heating and cooling loads are calculated when designing of a system.) If your climate requires a heating-only system, the term "furnace" would mean an air handler paired with a gas-fired heater and sold as an integrated unit. That's not what the OP described as their heating and air conditioning system.

If you'd like to consult another source with regard to what an air handler (fan-coil) unit is, you can look to Carrier Corp. for an explanation:

" A fan coil is an indoor unit of a heating and cooling system. It controls your home environment by moving air inside your home and can also affect your indoor humidity. As a complement to your air conditioner or heat pump, our variable-speed fan coil units can give you premium comfort and energy-saving performance. With an optional electric heat strip, a fan coil can also provide heat to your home if you live in milder climates."

https://www.carrier.com/residential/en/us/products/fan-coils/#

Because they are separate components in a heating and air conditioning system (each is ordered on a separate line item of our order and shipped in a different box,) any of them can be replaced without the need to replace all of the components. That's the point of making the distinction between "furnace" and "air handler." With proper maintenance, a furnace (i.e., a gas-fired heater) will typically outlast the air conditioner by a good number of years. The OP's question is whether it makes sense to replace their furnace at the same time they replace their air conditioner. They have the option to do either.

A heating and air conditioning system for our climate (zone 4) typically consists of three components: an air handler (which some people refer to as a fan-coil unit,) a compressor (either a heat pump or air conditioner) and a gas furnace. The term "furnace" used in this context means a gas-fired heater.

I've attached pictures below because I know if I ask the builder to do it... he won't maybe he doesn't know how. For technical reasons that are clearly way above and over the head of the builder... it would be counter productive to pair an "air handler or fan-coil unit" to a gas fired heater (furnace). Namely these parts and pieces require different voltages to operate. You would need at least two seperate circuits for operation.

However as you'll see in the pictures below there is a blower included with the furnace. So you don't need a "fan coil or air handler" either one when using a gas furnace for heat and cooling functions.

If you try to pair the above with a fan coil too (pictured below)? --- you've got big problems. (The blower in the furnace is in the way of air flow.)

Technical reasons why:

Fan coil or air handler either one will require 240v to operate.

A gas furnace will require 120v to operate.

This folks is exactly why you should question anything & everything you read on the internet.

This picture below represents a gas furnace with AC (stock photo found on the internet in the hands of someone who knows how to use the internet). There is no fan coil or air handler in this picture... why Charles Ross?

I service the Katy, Texas area.

There are adequate links in the posts above for houzzers to read about the difference between an air handler and furnace. Hope you have a nice Christmas, Ray, and get some rest.

Thanks so much to everyone who replied to provide me your views. I really appreciate your input and time.