Reduce the Cost of Arthritis Care With These Financial Tools

The details of your health plan have the greatest impact on your arthritis care expenses. However, these financial tools may help you pay out-of-pocket expenses and reduce your tax burden.

Flexible Spending Account
A flexible spending account (FSA) allows you to set aside a portion of your income before taxes to pay for qualified medical expenses (and childcare expenses).  This can help lower your taxable income. Also known as a flexible spending arrangement, this account is offered through your employer. If you don’t spend all the money in the plan year, your employer may offer one of two options (but not both):

• You get 2 1/2 more months to spend the left-over money.
• You can carry over up to $640 to spend the next plan year.

An employer may have a strict use or lose policy if the funds are not spent in the plan year, so make sure to check with the benefits manager.

Health Saving Account
A health savings account (HSA) allows you to set aside a portion of your income before taxes to pay for qualified medical expenses, including copayments, coinsurance and deductibles. Except in very limited circumstances, HSAs cannot be used to pay premiums. HSAs are available only with a high-deductible health plan (HDHP) -- $1,600 or higher for an individual, or $3,200 for a family.  For 2024, you can contribute up to $4,150 for an individual HDHP and up to $8,300 for family HDHP. HSA funds roll over year to year if you don't spend them. Contributing to an HSA not only helps you pay for medical expenses, but it can also reduce your adjusted gross income (AGI). This could make you eligible for a subsidy through the Health Insurance Marketplace if your income is close to the cut off requirement. You, your employer or your loved one can contribute to your HSA.  But employer contributions can’t be used to reduce your AGI.  You own the HSA, so even if you leave your job, you can still use the funds to pay for qualified expenses.

Health Reimbursement Arrangement/Account
Your employer sets up this account and contributes all the funds.  This is offered when the employer administers the health plan themselves instead of using an insurance company. You can use the money to pay health expenses. Leftover dollars may be carried over from year to year in your account.

Medicare Medical Savings Account
This account is combined with a high-deductible Medicare Advantage (Part C) plan. Medicare deposits money into your account to pay your health care costs before you meet the deductible. MSA funds roll over year to year if you don't spend them.

Medical Tax Deduction
The IRS allows you to deduct the portion of medical expenses that exceed 7.5 percent of your adjusted gross income. For example: your adjusted gross income is $40,000, so you can deduct medical expense that exceeds $3,000. But you must itemize your deductions to take the medical deduction.