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out-of-pocket medical expenses

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.

Filed Under: Health Insurance, Medical Debt, Q&A, Retirement Tagged With: Flexible Spending Account, FSA, health savings account, HSA, itemized deductions, medical expense deduction, medical expenses, medical expenses in retirement, out-of-pocket medical expenses

Thursday’s need-to-know money news

December 12, 2013 By Liz Weston

Today’s top story: Year-end tax tips from the experts. Also in the news: rescuing your 401(k), 2014 tax tables, and tips for combating financial holiday stress.

Year-End Tax Tips For 2013 From Tax Experts
These tips could make a big difference in your tax return.

Are You Doomed If Your 401(k) Has Bad Fund Choices?
Not if you’re aggressive.

2014 Tax Tables: What They Mean for Your Taxes
Getting ready to file.

7 Tips for Coping With Holiday Financial Stress
Combating holiday money woes.

Shopping for a Health Savings Account
Putting money aside for out-of-pocket medical expenses.

Filed Under: Liz's Blog Tagged With: 401(k), health savings account, holiday spending, HSA, out-of-pocket medical expenses, Retirement, tax return, tax tables, tax tips

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