20% of U.S. Adults Had Major Medical Expenses Last Year. Here Are 3 Ways to Save for Healthcare

These kinds of accounts can help when you face the unexpected.

Medical issues can pop up unexpectedly. And when they do, they can be costly. This holds true even if you have health insurance. Last year, a good 20% of Americans faced major medical expenses, according to new Federal Reserve data. If you're worried about paying for healthcare bills, here are three ways to prepare and avoid a crunch.

1. Pad your savings account

The great thing about savings accounts is that you can use them for any purpose. You can sock money away in savings to cover home repairs, car repairs, or -- you guessed it -- medical bills.

As a general rule, it's a good idea to save at least enough money to cover your health plan's annual deductible. That's the sum you pay out of pocket before your insurer starts covering your medical costs. But you may want to save more than your deductible so you have flexibility for additional healthcare expenses.

2. Participate in a flexible spending account

If your employer offers a flexible spending account (FSA), it can pay to sign up. With an FSA, you set money aside yearly for healthcare costs ranging from doctor visits to prescription copays to eyeglasses. The drawback of an FSA is that you must estimate your healthcare costs in advance, and use your plan balance by the end of the year or you risk forfeiting funds.

So, say you put $1,500 into an FSA, but you only rack up $900 in eligible medical expenses. That could mean you forfeit $600. From there, that money is usually returned to your employer. Your employer might then use it to offset its administrative costs related to offering an FSA. However, you can use an FSA for some over-the-counter items, like bandages and sunscreen, so you may have options for using up your funds.

The major upside of saving for healthcare in an FSA is that you get a tax break on your contribution. So if you put $1,500 into an FSA, that's $1,500 of earnings the IRS won't tax.

3. Fund a health savings account

Health savings accounts, or HSAs, are similar to FSAs in that they offer tax breaks on the money you put in. But whereas FSAs force you to spend down your balance every year, HSAs let you carry funds forward indefinitely. There's less pressure, plus, with an HSA, you can invest funds you don't immediately need so they grow into a larger sum over time.

The catch with an HSA is that you can only participate in one if you're enrolled in a high-deductible health insurance plan. But if you are, it's a good option to consider because it's even more flexible than an FSA. (And to be clear, you can't participate in an FSA and HSA at the same time -- you can only have one of these plans at a time).

Healthcare costs can be a major burden, no matter your age or income level. It pays to save well for medical bills so they don't drive you into debt.