Planning for unexpected medical costs

Key Points

  • An unexpected illness or injury has the potential to consume your cash flow and derail your retirement savings.
  • Factoring health care costs into your overall planning can help you mitigate risks and stay on track toward your financial goals.
  • An Ameriprise advisor will evaluate your situation and recommend solutions that are appropriate for you.

Planning for unexpected medical expenses is an important step to help preserve your income and retirement savings. Your Ameriprise financial advisor helps review solutions designed to cover unexpected costs. Here are three you might consider.


Health savings account

A health savings account (HSA) can help you pay for eligible health care expenses tax-free. If your employer offers an HSA, your paycheck contributions will accumulate and roll over every year. There is no annual “use it or lose it” provision, and you take your HSA with you if you move to a new employer.

An HSA offers three main tax advantages:

  1. Your contributions are pre-tax, which reduces your taxable income.
  2. Your account grows tax-free.
  3. Distributions from an HSA are tax-free, if used for qualified medical expenses.

If you have an HSA account when you reach age 65, you can also use those savings to pay for a range of health care services — for example, office visits, dental expenses and vision care — as well as Medicare premiums.


Disability income insurance

What would you do if your income stopped because of illness or injury? According to the Social Security Administration, just over one in four of today’s 20-year-olds will become disabled before reaching age 67.1

Disability income insurance can help protect you from an unexpected interruption in income. In addition, it can help you avoid taking withdrawals from your retirement accounts — a potential way to protect your future retirement income.

If your employer offers group disability income insurance, consider enrolling in coverage. You may also want to consider whether coverage only from your employer provides an appropriate safety net. Insurance companies provide options to supplement your group coverage with an individual policy.



Planning for health care in retirement can help you be better prepared to handle the expected and unexpected costs. Medicare is a significant piece of that planning.  

Medicare is a valuable program for many retirees, but it was not designed to cover health care expenses in full.2 For example, it doesn’t cover vision or dental, and there is limited coverage for nursing home and other long-term care. In addition, premiums and co-pays for covered services may sometimes become significant.

Your advisor will discuss solutions to cover the costs and walk you through Medicare choices.


How your Ameriprise advisor can help

Health care costs and Medicare are parts of the bigger picture in planning for retirement. Your financial advisor is here to help you prepare for your everyday financial needs as well plan for many complexities. Their recommendations for solutions will be based on your individual financial goals and needs.


1 U.S. Social Security Administration, Fact Sheet, 2020.

2 Employee Benefit Research Institute, Issue Brief No. 4.