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In certain circumstances, medical expenses can be deducted on the tax return without itemizing. To see if that option is a good fit for you, some questions:

1. Do you have medical insurance coverage through work or through a family medical insurance plan?
2. Is the medical insurance plan deductible (out of pocket) more than $1,400 for one person or more than $2,800 for family plan?

If you answered yes to the two questions above, consider a health savings account or HSA.

A Health Savings Account is a tax deferred interest bearing savings account.  Contributions are tax deductible. Accounts earn interest tax free. Balances are carried from year to year. Contributions are used to pay medical expenses until the policy deductible is met.

Careful! HSA’s have limits:

1.  Can’t use account to pay Insurance Premiums
2. Not available if have a Flex Spend Account
3. Not Available if over age 65
4. Not available if on Medicare
5. No deduction on tax return if employer funds the account (pre tax)
6. Medical expenses paid with HSA funds are not tax deductible (can’t deduct medical expenses twice)
7.  2020 Tax Year Contribution limits: $3,550 1 person plan, $7,150 Family plan. Add $1,000 to these limits if account owner is over age 50
8. 2021 Tax year Contribution limits: $3,600 1 person plan, $7,200 family, add $1,000 to these limits if account owner is over age 50

So if a person funds an HSA and deducts their HSA contribution on the tax return and then pays medical expenses from the HSA account, it works the same as deducting medical bills on the tax return without itemizing.

To explore your Health Savings Account options, contact your favorite bank or insurance company. Bring a copy of your policy to the appointment. Check with multiple companies and choose the one that is the easiest to use, has the highest savings interest rate for balances and the lowest fees.