Covering the Medicare gap
Medicare will not cover all medical expenses after retirement. The average American couple will need $301,0001 to cover out-of-pocket health care costs in retirement. An HSA, when managed properly, is a great option to cover the expenses that Medicare will not. Additionally, an HSA can be used to pay for dental, vision and hearing expenses, which may not be covered by Medicare.
1 The average American couple will need $301,000 to have a 90 percent chance of having enough money to cover out-of-pocket healthcare costs in retirement. Based on median prescription drug expenses. Source: Employee Benefit Research Institute 2019
HSAs provide the greatest amount of tax relief of any account type for the following reasons:
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