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Worried About Healthcare Bills? 3 Accounts Worth Saving In

A mom holding her young daughter in her lap while talking to the doctor in an examination room.

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It's no secret that healthcare can be expensive. From insurance premiums to copays, the cost of caring for ourselves can be monumental. So it's not surprising that 22% of respondents in a recent survey by the National Endowment for Financial Education said they're worried about covering their medical costs. If you have similar concerns, here are three accounts to consider saving in for healthcare.

1. A traditional savings account

It's a good idea to have money in a savings account for emergencies. But you may also want to open a separate savings account for medical bills.

While healthcare costs can sometimes be an emergency, they should also be budgeted and saved for accordingly. And socking money away in the bank will give you the freedom to easily take withdrawals for medical bills as needed.

How much should you save for healthcare? A good bet is to go through your medical bills from the previous year and put in enough money to cover an equivalent set of bills. Also, if your health insurance plan charges a deductible -- the amount of money you need to pay out of pocket before your insurer pays for your services -- then aim to save at least that much money. In fact, socking away your deductible is a good goal for your emergency medical expense fund.

2. A flexible spending account

With a flexible spending account, or FSA, you allocate pre-tax dollars for healthcare bills. If you contribute $1,500 to an FSA, that's $1,500 of income you won't pay taxes on. But an FSA also requires you to accurately estimate your healthcare expenses for the year. If you allocate too much money to your FSA and don't use it up within your plan year, you risk forfeiting the balance.

For the current year, FSAs max out at $2,750, and as of this writing, we don't know what the maximum allowable contribution will be for 2022. You can generally sign up for an FSA between October and December through your employer, so if you have access to one, go through last year's medical bills and do your best to land on the right contribution.

3. A health savings account

Health savings accounts, or HSAs, work a bit differently than FSAs. Not only do they come with higher contribution limits, but they also don't expire. If you put $1,000 into an HSA but don't use up your money in the near term, you can carry it forward indefinitely, all the while investing it so it could grow into a larger sum.

Like FSAs, HSA contributions are tax free. Right now, contributions max out at $3,600 for self-only coverage and $7,200 for those saving on behalf of a family. Savers 55 and older also get the option to contribute an extra $1,000 on top of whichever limit they qualify for.

In 2022, these limits are rising. For those with self-only coverage, the limit will be $3,650. For families, it will be $7,300. The extra $1,000 contribution option for those 55 and over will stay the same.

To qualify for an HSA, you must be enrolled in a high-deductible health insurance plan. This requirement does not exist for FSAs.

For 2021 and 2022, a high deductible is defined as $1,400 or more for self-only coverage and $2,800 or more for family coverage. That number could change in the future.

Prioritize healthcare savings

Even if you're in decent health, you never know when an injury or illness might land you in the hospital and leave you on the hook for serious bills. Make an effort to set money aside for healthcare bills to avoid a world of stress -- and debt -- once they arise.

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