President Donald Trump listens to a question as he meets with former hostage Danny Burch, an oil engineer who was taken hostage in Yemen in September 2017, in the Oval Office at the White House in Washington, March 6, 2019. Jonathan Ernst | Reuters

President Donald Trump's proposed budget might make it easier for seniors to save for health-care costs on a tax-free basis. The proposal calls for allowing Medicare beneficiaries to make tax-deductible contributions to health savings accounts "associated with high-deductible health plans offered by their employers or a Medicare Advantage plan." That's a change from current law, as people enrolled in the retiree health-care program cannot fund an HSA. Though it's uncertain whether this measure would be supported in Congress, this isn't the first time Trump has pitched the idea. Indeed, the 2019 budget had a similar provision. This is what the proposal might mean for you and your health-care costs in retirement.

Tax benefits

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HSAs allow you to save money either on a pre-tax or tax-deductible basis, have it accumulate interest free of taxes and then make tax-free withdrawals to pay for qualified medical expenses. They are offered in conjunction with high-deductible health plans, which come with a deductible of at least $1,350 for self-only coverage or $2,700 for family plans in 2019. In 2019, account holders can contribute up to $3,500 if they have self-only health coverage ($7,000 for family plans), plus an additional $1,000 if they're over age 55.

Finally, you can roll over your HSA balance from one year to the next, meaning you can grow your account for an extended period of time. More than 9 out of 10 employers are likely to offer high-deductible plans in 2019, according to the National Business Group on Health. Current law keeps Medicare beneficiaries from making new contributions to HSAs, but they can still use money in the account to pay for health-care expenses.

Retirement health costs