Healthcare in Retirement: How To Plan?

Updated January 15, 2024
9 min read
Healthcare in Retirement: How To Plan?


As the years advance, healthcare becomes a looming reality for the retiring population and the elderly in the United States. With more healthcare needs, susceptibility to chronic conditions, and the requirement for long-term care, navigating the intricate maze of healthcare becomes a necessity.

The stakes are high, especially considering that the Federal Health Insurance Program, Medicare, only partially covers health care costs for retirees. This significant financial burden calls for comprehensive healthcare retirement planning. In this article, we delve into what makes healthcare for US retirees and the elderly a costly affair, explore practical ways to save, unpack the layers of Medicare, discuss lifestyle changes that could make retirement healthier, and measure the impact of legal arrangements on retirement healthcare costs.

Why Is Healthcare for Retirees and the Elderly So Expensive in the US?

There are a number of factors that contribute to the high cost of healthcare for retirees and the elderly in the US. One of the most significant factors is the fact that retirees and the elderly often have more healthcare needs than younger adults. They are more likely to suffer from chronic conditions, such as heart disease, diabetes, and arthritis, and they may also need more prescription medications. In addition, the elderly are more likely to require long-term care services such as home health aides or nursing home care.

Another factor that contributes to the high healthcare costs in retirement and the elderly is the fact that Medicare, the federal health insurance program for retirees and the elderly, only covers a portion of healthcare costs. Medicare does not cover many medical expenses in retirement, such as dental care, long-term care, or most prescription medications. In addition, Medicare does not cover the entire cost of hospitalizations or doctor visits. Retirees and the elderly are responsible for paying a portion of their healthcare costs out of pocket.

How Can Senior Citizens Plan Their Retirement Healthcare Costs?

As you approach retirement, it’s important to start thinking about the cost of healthcare in retirement and its coverage. Medicare is the federal health insurance program for people who are 65 or older, and Medicare Advantage Plans are a type of private health insurance approved by Medicare.

The average person spends about $4,000 per year on healthcare after retirement, but the average cost of healthcare in retirement can increase as you get older. One of the ways to save on it is by using Medicare Advantage Plans, retirement health savings accounts, and long-term care insurance. These plans also typically have lower out-of-pocket costs than traditional Medicare.

Long-term care insurance is another option to consider if you’re worried about healthcare costs in retirement. Long-term care insurance can help cover the costs of things like in-home care, nursing home care, and assisted living. When it comes to retirement, planning for your healthcare costs and coverage is essential.

Most Common Questions About Healthcare in Retirement Costs

Planning for retirement involves much more than just ensuring you have enough money saved up to live comfortably. One of the major concerns that many people face as they approach retirement age is the cost of healthcare. Below are the answers to some pertinent questions that could help you navigate your healthcare planning journey towards retirement.

Is everyone required to enroll in Medicare at age 65?

You are required to enroll in Medicare at age 65 unless you are employed at a job with 20 or more employees that provides your health insurance coverage. If you delay enrolling in Medicare, you may have to pay a late enrollment penalty. That penalty is equal to a permanent 1% penalty for every year you did not enroll.

What are the different parts of Medicare coverage?

There are four parts to Medicare coverage:  A, B, C, and D. 

  1. Part A: Covers inpatient hospital stays, skilled nursing facility care, hospice care, and home healthcare.

  2. Part B: Includes doctor visits, outpatient care, preventive services, and some home healthcare. 

  3. Part C: Also known as Medicare Advantage. These plans are offered by private insurance companies and cover things like annual checkups, prescription drugs, and hospital stays.

  4. Part D: Enables prescription drugs.

You can enroll in all four parts of Medicare coverage, or you can choose to enroll in just one or two.

What is the average increase in cost per year in healthcare costs for seniors and retirees?

The average increase in retiree health care costs is about 3.5% per year. However, this number can vary depending on the specific healthcare costs involved and the particular seniors or retirees in question.

What are some lifestyle changes that people should make to avoid high healthcare costs in retirement?

Some lifestyle changes that people should make to avoid high health care costs in retirement include quitting smoking, maintaining a healthy weight, and exercising regularly. These lifestyle changes can help to reduce the risk of developing chronic health conditions that are expensive to treat.

How can a living will assist in controlling healthcare costs in retirement?

A living will is a legal document that outlines an individual’s wishes for medical care in the event that they cannot communicate those wishes themselves. This can include things like whether or not they want to receive life-sustaining treatment, such as artificial ventilation or CPR. A living will can help to ensure that an individual’s healthcare wishes are carried out, and it can also help to avoid costly medical treatments that the individual may not want.

What is long-term care insurance, and how does it help to control healthcare costs in retirement?

Long-term care insurance is a type of insurance that helps to cover the costs of long-term care, which can include things like in-home care, nursing home care, and assisted living. Long-term care insurance can help control healthcare costs in retirement by covering the costs of these types of care.

How can a supplemental or special needs trust help someone decrease healthcare costs in retirement?

Supplemental or Special Needs Trusts are legal trusts that can be used to hold assets for people with disabilities. These trusts can help decrease healthcare in retirement costs by allowing people to maintain their eligibility for government benefits, such as Medicaid.

What is the best way to plan for healthcare costs and coverage after retirement?

The best way to plan for retirement healthcare coverage is to start saving early and enroll in a retirement plan, such as a 401(k) or an IRA. Additionally, people should also be proactive about their health and take steps to prevent chronic health conditions. Finally, it is also important to research different types of insurance, such as long-term care insurance, to see if they are right for you.

Does the Veterans Administration pay for the healthcare costs of some senior citizens?

The Veterans Administration does pay for the medical costs in retirement of some senior citizens. Specifically, it pays for the healthcare costs of veterans who have service-connected disabilities, veterans with a low income or those in a catastrophic medical condition.


In conclusion, planning for health care cost in retirement is an intricate task that requires consideration of numerous factors. Remember, planning early is key: the sooner you begin to save and plan, the better positioned you will be to manage healthcare costs and enjoy a healthy, secure retirement. Healthcare in retirement doesn't have to be a burden; it can be managed effectively with the right planning and preparation.

Article by
Brad Biren
Elder Law & Tax Attorney

Brad Biren is a proud autistic professional, writer, and advocate for neurodiverse people within the business community. He is a tax & elder law attorney with a passion for estate planning and crisis Medicaid planning. His favorite part of his job is Special Needs Planning — a financial and legal roadmap to help families of diversely-abled people cultivate greater opportunities for their loved ones. Biren also assists startups and nonprofits with optimization challenges through his innovative and novel use of synergies between tax, law, finance, science, and technology.