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FILE – This file photo from February 24, 2021 shows an emergency room sign outside of Harbor-UCLA Medical Center in Torrance, California. Retirement health care is an expensive item, estimated in the hundreds of thousands of dollars. But there are ways to take the reins and keep expenses from skyrocketing, even before you retire. Health savings accounts can help you save tax-deductible money for future medical expenses. (AP Photo / Ashley Landis, file)
Ashley landis
By KATE ASHFORD NerdWallet
Retirement health care is an expensive item. Experts estimate that a 65-year-old retired couple in 2021 would need about $ 300,000 in after-tax savings for health care costs in their after-work life, even with Medicare, according to Loyalty.
The totals are intimidating, but you can take steps to keep costs as low as possible with good planning, the right insurance choices, and a healthy understanding of your terms and coverage. Try these strategies, now and in retirement, to help control your health care bills.
Get an HSA
A health savings account allows you to set aside pre-tax money for medical expenses. You can invest the funds, and the capital and income are tax-free if you use them for qualifying medical expenses now or in the future. This creates a powerful savings tool.
To use an HSA, you must have a high deductible health plan. If this type of plan makes sense to you, experts recommend saving money on your HSA and leaving it untouched for as long as possible. In 2021, you can save up to $ 3,600 pre-tax as a single person or up to $ 7,200 if you have family coverage.
“These accounts are the most tax-efficient plans,†says Sallie Mullins Thompson, chartered accountant and certified financial planner in New York City. “The main thing you need to do is contribute to it religiously whenever you can.”
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