How Much Money Will I Spend on Healthcare in Retirement?

Americans can expect to pay around $315,000 on healthcare costs during retirement.^[19] Even dividing that figure by the number of years one expects to live does not make the reality any less daunting. However, one reason that many Medicare recipients spend as much as they do in out-of-pocket healthcare expenses is because they do not take advantage of private Medicare products, like long-term care insurance, Medicare Advantage or Medigap plans. Granted, all the different Medicare Supplements can be a bit confusing, but for individuals who need help with copays and coverage during foreign travel, looking into private Medicare options is important.

We’ve broken down some answers to the most pressing questions people have about how much money is needed for healthcare while on Medicare and how to save money on healthcare in retirement.

Medical Costs for Check-ups and Other Preventive Care

Annual screenings and general check-ups are covered by most health insurance policies and Medicare. However, there will still be copays and coinsurance to consider in some cases, and a higher one if you need to see a specialist. Both Medicare and Medicare Advantage plans must include the following:

• Prevention includes a personalized prevention plan and health risk assessment.
• One mammogram is covered every 12 months for women aged 40 and older.
• Colorectal cancer screenings coverage vary based on the specific test and patient risk factors. A blood sample can cost less than $5 while a colonoscopy can cost up to $3,750.
• One flu shot per flu season is covered. It’s possible to find free or low-cost flu shots without insurance but they can cost up to $90 in some places.
• Pneumococcal shots usually require one shot in a lifetime, with a booster shot in certain situations.
• Hepatitis B shots come in a series of three shots. The price above includes all three shots.
• Cardiovascular disease screenings include blood tests to check cholesterol, lipid and triglyceride levels.
• Diabetes screenings include up to two screenings per year for individuals at risk for diabetes.
• Bone mass density screening is advised once every 24 months for people at risk of osteoporosis. The Dexa scan can be costly.
• Obesity screening and counseling include intensive behavioral therapy for obesity. Cheaper options for talk therapy include group sessions instead of one-on-one counseling.

Healthcare Costs for Specialist Visits

Specialist visits have a copayment after being billed to Medicare Part B. After meeting the Part B deductible, which is $226 in 2024, you will only pay 20% of the Medicare-approved amount for most doctor services, including specialist visits. Medicare covers the remaining 80%.

Because specialists charge more than general practitioners, expect a larger copay when you see a specialist. Both your general practitioner and specialist copays will be set amounts, like $20, $30 or $50.

You can also buy medicare supplements, also called Medigap, to help with out-of-pocket healthcare expenses like copays. Medigap will usually have a separate deductible, which can be as high as $2,800.

High-deductible Medicare supplements cost less each month because you have to pay your bills in full until you reach the deductible.

Which Medigap Plans Cover Copays?

Plan N pays 100% of the costs of Part B services, except for copayments on office visits and some emergency room visits.^[10]

Medigap Plan K will cover about 50% of your copays and Plan L will cover about 75%.^[10]

Plans F and G cover the most amount of out-of-pocket healthcare expenses with original Medicare but cost more each month.^[11]

A Part C, or Medicare Advantage (MA), replaces original Medicare’s Parts A and B, but has higher monthly premiums and lower out-of-pocket costs. Some MA plans brag about zero dollar premiums, but make sure they offer all that a good MA plan has to offer, like prescription drug coverage, dental, vision and hearing coverage as well.

You cannot buy MA, Part C and Medicare supplements. You can only buy Part C or Medigap.

See below for a visual representation of coverage for copays and copayments for Part B services: doctor visits, specialists visits and other health care services that are not hospital coverage (Part A):

Okay, so now you know that you can have lots of your needs covered with a Medigap plan. But how much do they cost? Here are some national averages below. Prices vary by location so it’s important to compare plans and prices.

Pricing is based on averages from MedicareSupplement data^[16]

How Much Will You Spend on Prescription Medications on Medicare?

According to the Health Policy Institute at Georgetown University, on average, Medicare beneficiaries spend roughly $581 per year on prescription drugs. This is higher than those on Medicaid ($297) and those with Medicare Advantage ($156).^[13]

Three-quarters of people aged 50-64 buy prescription drugs, while 91% of those aged 80 and older need medications. The average for ages 50-64 is 13 prescriptions drugs, and the average for those 80 and older is 22.^[13]

Without Medicare Part D, the Medigap plan for prescription drugs, or Medicare Advantage, which includes prescription drug coverage in most plans, you’ll spend thousands of dollars on medication if you have a chronic condition that requires multiple medications.

Quick Facts About Medigap Part D, Prescription Plan Coverage

• The national base premium is $34.70 but varies per plan.
• A higher income means a higher premium.
• After spending roughly $5,030 in prescription drug costs, you reach the coverage gap (limit varies per plan).
• During the coverage gap you pay 25% of the cost of your drugs.
• After spending $8,000 out of pocket, you will owe no copays.
• With Medicaid, you’d pay $1.55 for generics and $4.60 for brand-name drugs.
• After you spend $11,477.39 for prescription drugs, you will pay $0 for each drug for the rest of the calendar year.^[12]

How much you spend on prescription medications will depend on your health, how many medications you’ll need to take, if there is a generic brand for the drug prescribed to you and how much the drugs and generics cost.

Medicare beneficiaries with chronic illnesses like diabetes, hypertension, or heart disease may require ongoing medication, leading to higher annual costs. The average diabetic will spend $700 in out-of-pocket expenses per year, even with prescription drug coverage.^[13]

It’s also important to select a Medigap Plan D policy with a formulary that includes your necessary medications or their generic equivalents.

State Pharmaceutical Assistance Programs (SPAPs) are great if you live in a state that offers it. You may even be eligible for a state subsidized plan, like Medicaid, if you’re under a certain income level, which varies by state.

Costs Associated With Long-term Care

Long-term care insurance costs an average of $888 per year for people aged 50. It goes up to $1,850 per year for a senior aged 65 and $5,880 per year for a 75-year-old. Compare that cost to $51,000, which is what one year in a nursing home costs on average in the U.S.^[14]

About half of all Americans will require long-term care at one point in their lives or perhaps for the remainder of their lives. Whether or not you should buy long-term care insurance depends on access to informal long-term care, such as a family member or close friend taking care of you if and when you need it.

If you do not have people who will care for you and limited assets to liquidate for care at a facility, it’s a good idea to buy long-term care, preferably in your early 60s at the latest.

Medicare and Medicare Advantage usually have a limit of 100 days coverage. Medigap doesn’t offer long-term care benefits.

Here are some costs related to long-term care, which will vary significantly depending on location:

1. In-Home Care
   1. Home Health Aide for bathing, dressing, and grooming.
   2. Homemaker Services: for cleaning, cooking, and running errands.
   3. Skilled Nursing Care: Medical care provided by a registered nurse or therapist. Costs vary significantly based on the level of care required and if Medicare or Medicare Advantage will deem it medically necessary.
2. Assisted Living Facilities
3. Nursing Homes
4. Adult Day Care Services
   1. Provide social and support services during the day in a community setting.

Costs are national averages based on a Genworth survey. Prices vary significantly according to location.^[15]

Dental Expenses Seniors Commonly Have

If you plan to buy original Medicare when you turn 65, you should know that it doesn’t come with dental coverage unless you need oral surgery, which is covered by Medicare Part B.

If you switch from original Medicare to a Medicare Advantage plan, find one that offers dental coverage as well as hearing, vision and prescription drug coverage. These four important services are not covered by original Medicare.

If you stay with original Medicare, you’ll want to budget some money for a dental plan and a vision plan. You’ll also want to buy Medicare supplement Part D to cover prescription drugs, which can be very expensive without insurance coverage.

Prices vary per location.^[16]

Dental insurance can cost anywhere from $25 to $60 a month.^[17]

Traveling and Medicare Coverage

While many seniors buy travel insurance if they will be traveling for long periods of time and may need medical attention, it’s good to know that some Medicare products cover travel medical emergencies, up to limits.^[10] Take a look:

How Can Private Medicare Insurance Help?

Medicare supplement Part D can help pay for prescription drugs. A Medicare Advantage plan can replace your original Medicare plan and includes hearing, dental, vision and prescription drugs Buying an MA plan may be more cost effective than buying several standalone policies and Medicare Part D for drug coverage.

Also, consider how much you travel, for foreign travel health coverage. It’s important to do some math when shopping around for the right health care plan.