5 Ways Older Adults Can Save Money on Health Care

Taking care of your health is important to feel good, look good, and live the life you want. But you might be concerned that it also means breaking the bank. The good news is that there are easy ways older adults can save money and adopt a healthier lifestyle.

Here are five ways to cut the cost of health care and improve your physical and financial fitness.

1. Pay for health care using a medical savings account

Health care can take a bite out of your budget, especially if you don’t have health insurance or if your plan has a high medical and/or prescription drug deductible. According to a UnitedHealthcare survey, 86% of older adults are worried about illness, such as losing their mobility and cognitive health. Almost half (46%) of the respondents said they also worry about not having enough money as they age.

Fortunately, there are tax-advantaged accounts that make out-of-pocket medical and dental expenses more affordable.

A health savings account (HSA) allows you (or anyone else, such as an employer) to make pre-tax contributions to spend on current or future medical expenses, such as doctor co-pays, prescriptions, dental care and prescription eyeglasses.

To qualify, you must be enrolled in a high-deductible health plan you get through an employer or on your own. Funds in an HSA roll over from year to year with no spending deadline. However, if you spend amounts on non-qualified expenses, you must pay income tax plus a 20% penalty.

If you enroll in Medicare, you can no longer make HSA contributions; however, you can continue withdrawing funds to pay for qualified medical expenses—such as doctor copays, visits to a specialist, dental care and prescription eyeglasses—on a tax-free basis.

A flexible spending account (FSA) is similar to an HSA but is offered only by employers. It allows you or your employer to make contributions on a pre-tax basis, usually through payroll deductions. If you spend FSA funds on qualified medical and childcare expenses, they are never taxed. But unlike an HSA, you generally must empty an FSA each year.

2. Claim a tax deduction for qualifying medical expenses

In addition to tax breaks offered by medical savings accounts, the IRS gives you more relief by making out-of-pocket medical and dental expenses partly tax-deductible.

In addition to tax breaks offered by medical savings accounts, the IRS gives you more relief by making out-of-pocket medical and dental expenses partly tax-deductible.

To claim the medical deduction, you must itemize deductions on Schedule A when you file income...

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