Personal PlanningHealthcare Planning: The Costs Most People Don't Plan For
Medicare, supplemental insurance, HSAs, and long-term care — a clear look at the healthcare expenses that derail retirement plans.
Talk to a ProfessionalHealthcare is consistently one of the largest and most unpredictable expenses in retirement. Fidelity estimates that a 65-year-old couple retiring today will need roughly $300,000 to cover out-of-pocket healthcare costs through retirement — not including long-term care.
Understanding Medicare (Parts A, B, C, and D), when to enroll, and what supplemental coverage you need is essential planning for anyone approaching 65. Getting the timing wrong can result in permanent premium penalties.
The Health Savings Account (HSA) is one of the most tax-advantaged accounts available — triple tax-advantaged, in fact. Maximizing it during your working years creates a dedicated fund for healthcare costs in retirement.
What you need to know
Medicare basics
Medicare Part A covers hospital care (usually premium-free). Part B covers outpatient care and has a monthly premium. Part D covers prescription drugs. Most people also buy a Medigap or Medicare Advantage plan to fill the gaps.
When to enroll
You have a 7-month Initial Enrollment Period around your 65th birthday. Missing it can result in permanent late enrollment penalties on Part B and Part D. If you're still working with employer coverage, the rules are different.
Health Savings Accounts (HSAs)
HSAs are available with high-deductible health plans. Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free. After 65, you can use the funds for anything without penalty.
Long-term care
Most people will need some form of long-term care — home health aides, assisted living, or nursing home care. Medicare covers very little of this. Long-term care insurance, hybrid life/LTC policies, or self-funding are the main options.
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