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We save to vacation our golden years away. But the rising costs of healthcare are cramping those plans.
Retired Americans are confident they’ve saved for all they need to last the rest of their lives, according to a study from insurance company MassMutual.  There’s one exception, though – healthcare. The unpredictability makes it their biggest financial concern.
“While we’re working, many of us think about retirement in terms of our leisure pursuits, a kind of permanent vacation that requires more disposable income,” says MassMutual executive Tom Foster Jr. “Retirees’ experience tells us that health concerns become increasingly prominent, especially as many retirees begin experiencing health issues and their subsequent costs.”
Here’s how much experts say you need to have saved for healthcare in retirement, and how to do it.
What’s the cost of healthcare in retirement?
Fidelity Investments estimates Americans will pay $260,000 for healthcare costs during retirement. 
But we’re struggling to save for retirement in any capacity, not just for healthcare. Because we don’t have as much money to save for retirement or emergencies (or both), we either go into debt to pay for them or we ignore our health issues because we simply cannot pay for them.
While most Americans face healthcare problems and say it’s their biggest worry, it’s older Americans that have some of the hardest times being able to afford it.
How much does long term healthcare cost?
Americans think they’re healthier and wealthier than they really are. That’s the conclusion of a study that shows only one-third of us think we’ll need long-term care in our old age, when history shows more than half of us really do.
If we do need to go to a nursing home, we think it’ll cost around $54,000 a year. Sadly, it’s almost double that, at more than $100,000. And it’s only going to rise, according to Lincoln Financial Group. 
The investment firm’s vice president of MoneyGuard Distribution, Bill Nash, feels our ignorance to long-term health costs is a reason to begin planning for our final days sooner than later.
Be proactive and have these conversations about plans with your family now. Down the road, if you don’t have enough saved for retirement, your kids will probably end up caring for you – physically and financially.
So if you want to avoid putting the financial burden on your kids, you can try a retirement saving vehicle such as an HSA.
Get an HSA
It’s possible you’ve never heard of them, but Health Savings Accounts have been around for a decade. Fewer than 10 percent of Americans have one, according to a 2014 survey from InsuranceQuotes.com.  But half agree they’re a good way to cut the tax bill, and nearly a third agree it would make paying for healthcare easier.
There are a few catches: Not everybody qualifies for one, and you can be taxed if you break the rules. But if you have a qualifying health plan, you can stash up to $3,350 for medical expenses if the plan is just for you, or $6,650 a year for a family plan. And if you’re over 55, you can add an extra $1,000 per year. Intrigued? Here are the details…
What is an HSA?
You can treat an HSA like a savings account, where it’s completely safe, government-insured, and gathers a tiny bit of interest. Banks like State Farm Bank often give you a debit card for the account.  With some, like Chase, you can even get old-fashioned checks for HSA expenses. 
You can also treat an HSA like an investment, where you risk losing money but can also make a lot more, and it’s tax-free if you follow the rules. Many companies that offer HSAs put your contributions into mutual funds. Wells Fargo lets you start with the savings account and then graduate into an investment account.
Here are some other things to keep in mind when you set up an HSA…
You don’t have to spend HSA money right away. If you can afford to pay out of pocket and keep good records of qualified expenses (more on that later), you can get reimbursed for them at any time – while your investment is still earning tax-free money.
You can make contributions for a given year until tax day of the following year.
Even if you don’t owe tax on them, you’re supposed to report withdrawals (or “distributions”) to Uncle Sam.
Do I qualify for an HSA?
To qualify for an HSA, you need a certain kind of health insurance known as a high-deductible health plan. (Or an HDHP, because in the medical world, everything is an acronym.) You can’t get one if you’re enrolled in Medicare or can be claimed as a dependent on someone else’s tax return.
Deductibles are how much you pay out of pocket before your insurance kicks in. So having a high deductible makes your premium cheaper, but means you pay more directly for your care. Whether the costs balance out compared to a traditional health plan depends on your overall health.
To be dubbed an HDHP, there are two requirements. First, an individual plan requires a deductible of at least $1,250, and a family plan of two times that amount. Second, there has to be an annual cap for out-of-pocket expenses: $6,350 for an individual and $12,700 for a family.
Some people, including Insurance.com, refer to high-deductible plans as “catastrophic plans,”  because they’re meant to take care of you if the worst happens.
The federal government has separate definitions for HDHP  and catastrophic plans  – you generally have to be under 30 to get catastrophic coverage. But the two terms often overlap because these kinds of plans make the most sense for people who are young and healthy, anyway.
How does an HSA work?
InsuranceQuotes.com’s survey showed most people have no clue how an HSA works or what you can spend the money on – which is probably why most people don’t have one, and why the site created a six-question quiz to help educate folks.  (Read this first and you’ll ace it.)
You can spend HSA money on whatever you want, but that’s a bad idea. If the expenses aren’t qualified, you suddenly owe income taxes on that money, and you get hit with a 20 percent penalty if you’re younger than 65. So what qualifies?
Here’s the big thing that usually doesn’t: Your health insurance premium. More than half of the people surveyed got this wrong. But there are a few exceptions: HSA money can be used to pay premiums for continuing coverage like COBRA, coverage while you’re collecting unemployment, Medicare or other coverage if you’re over 65, and long-term care insurance.
You can also use an HSA to pay for things in your deductible – yeah, the very out-of-pocket threshold that has to be high enough to qualify for an HSA.
You also can’t spend it on any over-the-counter meds other than insulin, unless you get a prescription for them. And you can’t spend it on a gym membership, either, although 22 percent think you can. Here’s some more stuff you can spend it on, according to the IRS… 
Braille books that cost more than regular printed editions
Dental treatment (besides cosmetic stuff like teeth whitening)
Hearing aids and batteries
LASIK eye surgery
Surgery (besides cosmetic surgery)
Tuition for children with learning disabilities
Healthcare in their golden years seems to leave most people worrying. But healthcare shouldn’t be your only concern in retirement. Check out Debt.com’s other guides for tips on retirement planning and saving.
Cameren Boatner contributed to this report.
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Joe Pye is a certified debt management professional. He served as Editor-in-Chief of Florida Atlantic University’s student-run newspaper, the University Press. He was a finalist for the Mark of Excellence award by the Society of Professional Journalists Region 3 for feature writing and in-depth reporting. He now covers personal finance topics for Debt.com uncovering trends that help readers deal with the financial world. He graduated with a bachelor’s degree in multimedia journalism from Florida Atlantic University.
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