Medicare, Social Security, and Insurance

5/10/2021 | By Seniors Guide Staff

Health care remains expensive, but it can be more affordable with these tax breaks for health care strategies.

Contribute to a health savings account

If you have a qualifying high-deductible health plan, for 2021 you can put up to $3,600 in an HSA if you have self-only coverage or $7,200 if you have family coverage (plus $1,000 in catch-up contributions for those who are 55 and older). Pretax (or tax-deductible) money goes into the account, it grows tax-deferred, and you can withdraw the funds tax-free for eligible medical expenses.

Stash money in a flexible spending account

If you have access to a health care FSA through an employer-sponsored health plan, you may be able to contribute as much as $2,750 in pretax funds for 2021, and you can withdraw the money tax-free for qualifying medical expenses. Typically, employers may allow employees to carry over a limited amount of unused funds to the following plan year, or they may offer a grace period of two and a half months to use the previous year’s funds. Because of special rules in response to the pandemic, however, employers currently may permit employees to roll over unlimited amounts from the 2020 plan year to 2021, and from 2021 to 2022. Or employers can lengthen the grace period for 2020 and 2021 plans to 12 months.

Brush up on HSA- and FSA-eligible expenses

You can withdraw HSA and FSA money tax-free to pay for deductibles and co-payments or co-insurance, as well as a variety of other expenses, including eyeglasses, medical monitoring and testing devices, and orthodontia. And thanks to rules that went into effect in 2020, you can now use the funds for over-the-counter drugs (such as pain relievers, cough suppressants and antihistamines) without a prescription, as well as for feminine-hygiene products.

Save for medical expenses in retirement

HSA funds have no expiration, making an HSA a great vehicle to tuck away money for medical expenses in retirement. Premiums for Medicare parts B and D and Medicare Advantage plans (but not supplemental policies) are HSA-eligible, as are long-term-care insurance premiums (up to specified limits) and expenses for certain home improvements to accommodate medical conditions — say, widening doorways or adding support bars.

The Caregiver’s Guide to Medicare

Deduct medical expenses

If you itemize deductions on your tax return, you may deduct qualified medical and dental expenses (such as prescription drug costs and payments to medical providers) that are unreimbursed by insurance and exceed 7.5% of your adjusted gross income. See IRS Publication 502, Medical and Dental Expenses, for more information on receiving tax breaks for health care.

Lisa Gerstner is a contributing editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit

©2021 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

Seniors Guide Staff

Seniors Guide has been addressing traditional topics and upcoming trends in the senior living industry since 1999. We strive to educate seniors and their loved ones in an approachable manner, and aim to provide them with the right information to make the best decisions possible.

Seniors Guide Staff