Rising Health Insurance Expenses Spur Year-End Strategies to Trim Medical Bills

Millions of U.S. households face another jump in health-care costs, and financial planners say the final weeks of the year are critical for making every medical dollar count. Premiums, deductibles and out-of-pocket limits are expected to climb again in 2026, adding urgency to steps that can soften the impact before plan totals reset on Jan. 1.

Premiums headed higher

Consultancy firm Mercer projects that worker contributions to employer-sponsored plans—which cover roughly 154 million people under age 65—will rise by 6 % to 7 % on average in 2026. For consumers who buy coverage through the Affordable Care Act marketplace, the outlook is more severe. Research by the Kaiser Family Foundation indicates that premiums could jump 114 % next year if temporary enhanced premium tax credits expire as scheduled at the end of this year.

Use remaining coverage before deductibles reset

Households that have already met their 2025 deductible, or even their annual out-of-pocket maximum, may owe little or nothing for additional in-network services completed in December. Financial advisers recommend reviewing upcoming appointments and, when medically appropriate, moving procedures such as outpatient surgeries, diagnostic tests or dental work into the current calendar year to take advantage of coverage already earned.

The strategy can be especially valuable for families enrolled in high-deductible health plans, where meeting the deductible early is common because of large expenses like childbirth or chronic-condition treatments. Once the plan year restarts on Jan. 1, all cost-sharing thresholds go back to zero.

Evaluate the medical expense tax deduction

The federal tax code permits taxpayers to deduct unreimbursed medical expenses that exceed 7.5 % of adjusted gross income. To claim the break, however, filers must itemize instead of taking the standard deduction, which will stand at $15,750 for single filers and $31,500 for married couples filing jointly for the 2025 tax year. Those amounts will rise to $16,100 and $32,200, respectively, in 2026.

Because most taxpayers claim the standard deduction, relatively few qualify for the medical-expense write-off. Nevertheless, households on the margin can benefit by accelerating deductible services into the current year so total medical spending clears the 7.5 % threshold. Costs covered by pretax funds from a health flexible spending account (FSA) or health savings account (HSA) cannot be counted toward the deduction.

The Internal Revenue Service explains the rules for itemizing on its official site, providing worksheets and examples for calculating eligibility (Topic No. 502 | Medical and Dental Expenses).

Spend down flexible spending accounts

FSAs allow employees to contribute pretax dollars for qualified medical expenses, but most plans operate under a “use-it-or-lose-it” rule at year-end. The maximum contribution is $3,300 for 2025, rising to $3,400 in 2026. Unspent balances ordinarily forfeit on Dec. 31, although some employers let workers carry over up to $660 or grant a grace period of 2.5 months.

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If a balance remains, planners suggest scheduling eye exams, purchasing prescription or over-the-counter medications, replacing contact lenses, or buying approved medical devices before the deadline. Participants who misunderstand the forfeiture policy risk losing the entire amount set aside during the year.

Maximize health savings account contributions

HSAs combine triple tax advantages—pretax contributions, tax-free growth and tax-free withdrawals for qualified expenses—without any forfeiture requirement. The 2025 contribution cap is $4,300 for individuals and $8,550 for families, increasing to $4,400 and $8,750, respectively, in 2026. Savers age 55 or older who are not yet enrolled in Medicare can add an extra $1,000.

Unlike FSA funds, HSA balances can remain invested indefinitely, allowing the account to supplement retirement savings. Savers willing to pay current medical bills out of pocket can leave contributions invested and later reimburse themselves—provided they keep receipts—an approach some advisers describe as creating a “stealth” retirement portfolio.

Contributions for the 2025 tax year can be made until April 15, 2026, giving taxpayers an additional window to lower taxable income and build reserves for future health care needs.

Key dates and figures at a glance

• Projected increase in employee premiums for 2026: 6 %–7 % (Mercer)
• Possible ACA marketplace premium jump if credits expire: 114 % (KFF)
• Medical expense deduction threshold: 7.5 % of adjusted gross income
• Standard deduction 2025: $15,750 single / $31,500 married filing jointly
• Standard deduction 2026: $16,100 single / $32,200 married filing jointly
• FSA contribution limits: $3,300 in 2025; $3,400 in 2026
• FSA carryover cap for 2025 balances: $660
• HSA contribution limits: $4,300 individual / $8,550 family in 2025; $4,400 / $8,750 in 2026
• HSA catch-up contribution (55+): $1,000
• Deadline for 2025 HSA contributions: April 15, 2026

With premiums and cost-sharing trending higher, reviewing deductibles, tax thresholds and account balances before year-end can prevent lost tax advantages and reduce next year’s out-of-pocket burden.

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