For the majority of us, the end of the year is a time when we are caught up in holiday preparation, travel plans and wrapping up loose ends at work. Amidst all this hustle bustle, there is one area we tend to overlook- healthcare financial planning. If you want to make the most of your current insurance benefits and possibly reduce your tax burden, now is the time to act.
That said, here are five smart and timely strategies that can help you finish the year strong, save money and also set yourself up for better health and financial security in the coming year.
- Take Full Advantage After Meeting Your Deductible
Have you hit your insurance deductible for the year? If yes, this is a valuable opportunity for you!
Once you have met your annual deductible, your insurance usually starts covering a higher percentage- or even 100%- of covered medical expenses. This means any non-urgent procedures that you may have been putting on hold like physical therapy, a minor surgery, an MRI or consultation with a specialist; could now cost considerably less now than they would in January.
So, if you have been thinking about addressing that chronic joint pain, getting a sleep study or managing a condition you have been ignoring for a long time; schedule these before year-end so you can save hundreds if not thousands of dollars.
This is smart healthcare financial planning. Look at your calendar, talk to your providers and get those appointments booked at the earliest. If you miss out on this window, this is leaving money on the table.
- Don’t Let FSA Funds Go to Waste
If you have a Flexible Spending Account (FSA), here is a reminder- use it or lose it! Most FSA funds expire at the end of the year and any unused money generally does not roll over. Some plans do allow a small rollover or grace period- however; you may want to verify this.
Maximizing your FSA ensures you do not waste pre-tax dollars. It can also serve as an effective part of your broader medical expenses tax planning strategy.
This is the perfect time to schedule dental visits, schedule eye exams or buy any eligible medical supplies- for instance, contact lenses, prescription glasses, over-the-counter medications, or first-aid kits etc.
However, if you are unsure about how to spend those remaining funds, it is a good idea to have an end-of-year financial checklist that you can refer to and see what expenses you may have missed earlier in the year. It may also help to check with your organization’s benefits portal or HR department for a full list of eligible expenses.
- Explore the Medical Expense Tax Deduction Opportunity
If your tax-deductible medical expenses exceed 7.5% of the adjusted gross income, you may be eligible to deduct them when you file your federal taxes. This would include elements like:
- Long-term care services
- Out-of-pocket surgeries
- Dental treatments
- Mental health therapy
- Travel for medical care
- Prescription medications
Now here is what you need to do!
If you are already close to that 7.5% threshold, consider grouping or bunching the remaining medical costs into this tax year. This would mean scheduling any upcoming procedures, stocking up on prescriptions or handling any elective treatments before December 31.
When it comes to medical expenses tax planning, this is a lesser-known tactic. However, it can provide a significant deduction and help you reduce taxable income- something you will really appreciate come April.
- Max Out Contributions to Your HAS
If you are enrolled in a high-deductible health plan (HDHP), you probably qualify for a Health Savings Account (HAS). And if you are not maxing it out before the year ends, you are missing out on one of the most effective tax-advantaged tools available out there.
For 2025, you can contribute up to $4,150 individually or $8,300 as a family- with an extra $1,000 catch-up contribution if you are over 55. Contributions are all pre-tax and your money grows tax-free, while withdrawals for qualified health expenses are tax-free as well.
It is the best savings account you can find.
Here is another plus! Unlike FSAs, unused HAS funds roll over indefinitely and can be invested too. This gives you long-term savings for future healthcare needs or even retirement. Hence, if you are eligible, the financial benefits of HSAs make them a must-have!
That said, if you are not at the max yet, consider topping it off now- before December 31st. It is one of the most tax-efficient tactics you can apply this season.
- Review and Update Your Health Insurance Coverage for Next Year
Many people tend to auto-renew their health insurance without looking; although open enrollment is your once-a-year opportunity to adjust your insurance coverage.
This is your chance to make sure your plan is still in line with your actual health needs and budget.
Here are some questions you may want to ask yourself1
- Did you overpay for services this year?
- Did you underutilize your plan?
- Are your doctors still in-network?
- Are you expecting more or fewer medical needs next year?
Maybe you need a plan with better prescription coverage- or maybe it is time to switch to an HDHP and start using an HSA. Making these small adjustments may not seem much at first glance, but they can have a big impact on your health-care budget as well as your long-term financial health.
Also, use this time to review your dental and vision plans, double-check your dependents, and update any automatic contributions. A simple review now can prevent financial headaches later and it is also a vital part of any smart end-of-year financial checklist.
Final Thoughts
It is easy for health care planning to take a back seat, particularly during a busy holiday season. However, the few weeks leading up to the next year present a real opportunity to make informed decisions that will benefit both your wallet and your well-being.
Be it using your deductible and tapping into FSA funds, boosting your HSA and optimizing your insurance for next year, there is a lot you can do to finish the year strong. And each of these strategies ties into a bigger picture that comprises mindful health-care financial planning.
When it comes to your health and financial well-being, it is important to plan ahead, stay informed, and take action at the right time. This way, you do not just save money; you also take control of your health and your financial future. And that is something which should be a priority for all!
So, are you ready to take charge of your year-end health care planning?
Schedule those appointments, check your accounts, and talk to a trusted advisor or health-care provider.
