Dear Liz: My wife and I are in our early 90s and are lucky to have health insurance. Yet, we face significant out-of-pocket costs.
As you might guess, we will be retiring soon and will rely on Social Security, pensions, and investments for income.
Are we able to use a flexible spending account funded with pre-tax dollars? If so, what’s the best way to go about setting that up?
Answer: Unfortunately, I don’t have access to any pre-tax accounts to help pay for medical bills.
Flexible spending accounts are offered by employers, with yearly contribution limits (the limit is $3,300 for 2025). Health savings accounts allow for higher contributions, but a qualified, high-deductible health insurance plan is necessary. As I’m on Medicare, I can’t contribute to an HSA anymore, perhaps like the two of you.
Medical expenses that exceed 7.5% of your adjusted gross income can usually be deducted, but to claim that, your total itemized expenses need to surpass the standard deduction. In 2025, that standard deduction stands at $34,700 for married couples over 65 filing jointly. (For couples filing jointly, it’s $31,500, plus each spouse over 65 gets an extra $1,600.)
Additionally, there’s a new temporary deduction of $6,000 for those over 65. This deduction begins to phase out when adjusted gross income exceeds $150,000 for married couples filing jointly and disappears for AGIs over $250,000. It’s set to expire after the 2028 tax year.
Liz Weston, a certified financial planner, is a personal finance columnist. Questions can be submitted to 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or through the Contact form at AskLizWeston.com.
