Health savings accounts aren't being used by older Americans who need them the most


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Many older Americans worry about rising medical expenses, and those who may benefit most from a tax-friendly health savings account are the least likely to have one. 

That’s according to a report from the National Poll on Healthy Aging, which surveyed Americans ages 50 to 80 about health expenses and savings. 

Health savings accounts allow those with eligible high-deductible insurance to set aside money for future medical costs. For 2021, the deductible must be at least $1,400 for individuals or $2,800 for family plans.

These accounts offer three tax write-offs. Participants can deduct contributions, grow the money tax-free and withdraw the funds tax-free for qualified health expenses.

Fewer than half of Americans age 50 and older with high-deductible insurance have a health savings account, the report shows. And those who have an account are more likely to be healthier, higher income and more educated.

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“That’s concerning because the remainder does not have a tax-advantaged savings account that can help them shoulder the burden of those large deductibles,” said first author Dr. Jeffrey Kullgren, associate professor of internal medicine at the University of Michigan.

Some 13% of older Americans have delayed seeking medical care because of cost concerns, the poll found, and 12% have skipped treatment because they couldn’t afford it.

“Forgoing or delaying care due to cost is unfortunately all too common,” he added.

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Nearly 20% of older Americans were “not at all confident” about covering out-of-pocket health costs over the next year, the survey found.

“Forgoing or delaying care due to cost is unfortunately all too common.

Dr. Jeffrey Kullgren

Associate professor of internal medicine at the University of Michigan

Missed tax savings

More than half of private-sector employees with company health plans have a big enough deductible to qualify for a health savings account, according to a report from the Employee Benefit Research Institute.

And, eligible employees without a health savings account may be missing the chance to set aside money for bigger future expenses, Kullgren said. 

Moreover, few accountholders are saving long-term by investing the funds. In 2020, only 9% of health savings account participants were investing their balance, the Employee Benefit Research Institute found.

“As the money accrues, it can take some of the stress out of making difficult decisions about healthcare,” Kullgren said.

The cost of healthcare for older Americans has been a top concern for President Joe Biden and Democrats as they debate their $3.5 trillion spending plan.   

House Democrats have proposed expanding Medicare to include dental, hearing and vision as part of their budget. Another proposal aims to reduce the cost of prescription drugs by allowing Medicare to negotiate with drug companies. 

Democratic lawmakers also want to close the Medicaid coverage gap for millions of Americans living in states that didn’t expand the program under former President Barack Obama. 



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