Health Insurance

Q&A: Couple worries about soaring ACA health care premiums

August 11, 2025 By Liz Weston Leave a Comment

Dear Liz: My wife and I have health insurance through the Affordable Care Act exchange. With the enhanced tax credit ending this year, our insurance bill could go up from $500 a month to about $2,000 a month. Are there any good options or plans you can recommend? Would filing taxes separately help if my wife’s income made her eligible for MediCal?

Answer: ACA premiums for next year have not been set, although the cost of coverage is expected to rise sharply after Congress ended enhanced premium tax credits that made coverage more affordable. The Peterson Center on Healthcare and KFF estimate that out-of-pocket premium payments will increase about 75% on average next year because of this change. In addition, insurers are asking for premium increases to cover rising healthcare costs and tariffs may further add to the cost of drugs, medical equipment and supplies.

Shop carefully during open enrollment, and consider a plan with a higher deductible to help control costs. You also could talk to a tax pro about ways to reduce your income in 2026, if it will help you qualify for a premium subsidy.

Just filing your taxes differently won’t get your wife qualified for MediCal, which is California’s Medicaid health insurance program for low-income people. MediCal looks at household income when determining eligibility. Actually being separated might work, but discuss this option with an attorney and a tax pro since it will have many legal and tax implications.

Q&A: What can retirees do to deduct medical expenses?

August 5, 2025 By Liz Weston Leave a Comment

Dear Liz: My wife and I, both in our early 90s, are fortunate to have good health insurance. However, we have significant expenses that are not covered. As you might expect, we are retired and receive income from Social Security, pensions, annuities and investments. Are we eligible to use flexible health accounts funded with pretax dollars? If so, what’s the best way to set that up and how would we pay those uncovered health bills?

Answer: Unfortunately, you don’t have access to pretax accounts that could help you pay medical bills.

Flexible spending accounts are offered by employers, and contributions are limited annually (in 2025, the limit is $3,300). Health savings accounts have higher limits but require you to have a qualifying high-deductible health insurance plan. Once you’re on Medicare, as you two presumably are, you are no longer allowed to contribute to an HSA.

You might be able to deduct medical expenses that exceed 7.5% of your adjusted gross income. To claim the deduction, you would need to have enough itemized expenses to exceed the standard deduction, which in 2025 is $34,700 for a married couple filing jointly who are 65 and older. (The standard deduction for a married couple filing jointly is $31,500, while people 65 and older get an additional deduction of $1,600 each.)

There’s also a new, temporary $6,000 deduction for people 65 and older that is available whether you itemize or take the standard deduction. This bonus deduction begins to phase out for adjusted gross income above $150,000 for married couples filing jointly and disappears at AGIs above $250,000. This deduction is set to expire after the 2028 tax year.

Q&A: Confusion about spending HSA money after 65

March 3, 2025 By Liz Weston

Dear Liz: I’ve read that after age 65, health savings account money can be spent on anything. Your recent column said it could be spent only on medical expenses. Which is true?

Answer: At age 65, there is no longer a penalty if you spend HSA money on something other than qualifying medical expenses. Those withdrawals will be subject to income tax, however, so you’d be losing one of your HSA’s three tax breaks (deductions on contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses).

You don’t have to have incurred the medical expenses in the same year you spend the money for the withdrawals to be tax-free, however. Savvy HSA owners keep records of any out-of-pocket medical expenses that weren’t reimbursed by insurance, flexible savings accounts or other means. As long as the unreimbursed expenses were incurred after the HSA was established, they can be used to justify tax-free withdrawals years or even decades in the future.

Q&A: Getting an HMO to cover an outside specialist

March 3, 2025 By Liz Weston

Dear Liz: You’ve written about health maintenance organizations and how they may not cover care outside their networks. Be aware that HMOs will sometimes cover specialists outside of their network, especially in cases where they don’t have that type of specialist, or for an unusual condition needing a second opinion. It doesn’t hurt to ask! I did that when I knew that I should see an orthopedic oncologist to evaluate my scans recently, and my HMO did not have that specialist. I found that type of doctor, and then requested a referral and obtained it, and so it was totally covered. I also did that in 2007 when I had a similar condition needing surgery, and I even had surgery in a hospital different from the one that my HMO normally used, all totally covered.

Answer: Thanks for sharing your experience! HMOs typically don’t cover out-of-network care except in emergencies, but there may be exceptions. HMO members should educate themselves about their plan’s coverage and learn how to advocate for their care. It can also help to have a primary care physician who understands the system and is willing to ask for exceptions to HMO rules when appropriate.

Q&A: Health savings accounts offer a rare triple tax break. Here’s what to know

January 7, 2025 By Liz Weston

Dear Liz: Can I contribute additional money to my health savings account, above the amount I’m contributing through payroll deduction? Also, I have an HSA account from a previous employer and one from my current employer. Can I combine the two?

Answer: If you have a qualifying high-deductible health insurance plan, you can contribute up to $4,300 this year to an HSA if the plan covers just you or $8,550 if the plan covers your family. If you’re 55 or older, you can contribute an additional $1,000. You can make additional contributions if your payroll deductions for the year, plus any employer contributions, fall short of the limit.

Maximizing your contributions can make sense because HSAs offer a rare triple federal tax break. Contributions are pre-tax, the money grows tax deferred and qualifying medical expenses can be paid with tax-free withdrawals. You can invest the money in your HSA for growth, and the balance can be rolled over year after year, making it a powerful potential supplement to other retirement plans. Although HSAs can be used any time to pay for medical costs, many HSA owners pay those expenses out of pocket so their accounts can continue to grow.

Consolidating an old HSA into your current one can be a smart move because combining accounts can reduce account fees and make it easier to manage your investments. You’ll also run less risk of losing track of an account.

The best way to consolidate would be to contact your current HSA provider and ask them to facilitate a direct trustee-to-trustee transfer from the old account. However, not all providers allow “in kind” transfers of investments. It should be no problem to transfer any cash in the account, but you may be required to sell the investments. You won’t owe federal tax on such a sale, but some states, including California, will tax any capital gains that result.

Q&A: Navigating the maze of government assistance for an adult child

December 2, 2024 By Liz Weston

Dear Liz: I have a daughter who is 21 and a single mother with a 1-year-old. She has been diagnosed with borderline personality disorder and major depressive disorder. She hasn’t worked since high school and can’t hold a job. She is no longer a dependent as of this year. My question is what assistance is she eligible to apply for? She already is with WIC and getting benefits for the baby. She’s a mess and I’m having difficulty understanding what she can apply for, and what is realistic in terms of Supplemental Security Income, disability, housing assistance and so on.

Answer: Government benefits can be a nightmarish maze to navigate, but you and your daughter may be able to find your first guide in the WIC program. WIC — which is formally the Special Supplemental Nutrition Program for Women, Infants, and Children — provides low-income women and children with supplemental food and nutrition counseling. WIC also provides screening and referral to other benefit programs that could help your daughter and grandchild.

Another resource is the benefits finder tool at USAGov, the official site of the federal government. Start at https://www.usa.gov/benefit-finder.

You didn’t mention health insurance, but making sure your daughter and her child have coverage is crucial. With medication and counseling, your daughter could stabilize enough to become employable and start to build her young life. Under the Affordable Care Act, she can continue on your health insurance until age 26 even if she’s not a dependent for tax purposes. Otherwise, check the health exchanges at https://www.healthcare.gov/. Please act quickly, as open enrollment ends Dec. 15.