Good News and Bad News For Health Care Costs in Retirement

Oct 12, 2018 / Amanda Chase, Horsesmouth Assistant Editor

Americans planning for retirement will find both positive and negative news in HealthView Services’ 2018 Retirement HealthCare Costs Data Report. The projections for health care costs in retirement are a little lower than last year’s report, but legislative changes to Social Security and Medicare have eliminated strategies that increased lifetime benefits and elevated the number of retirees who face Medicare surcharges. The long-term trend of cost-shifting health-related expenses to retirees continues.

The report shows that retirement health expenses are projected to rise at an average annual rate of 4.22% for the foreseeable future, compared to 5.47% in last year’s report. This inflation rate is the principal driver of future health care costs, which will continue to out-pace U.S. inflation and expected Social Security cost of living adjustments.

Drug prices are rising at a slower rate, due to growing utilization of generics over brand name drugs, the rise of rebates and prefrred pharmacies, legislation that accelerated the closing of the Part D “Donut Hole,” and shared-savings arrangements between plans and providers. However, retirees still face a heavy health care burden. The average healthy 65-year-old couple retiring this year can expect to pay $363,946 ($537,334 future value) in lifetime Medicare and supplemental insurance premiums and out-of-pocket costs.

The message from this report is relatively simple: while projections are lower, paying for the high cost of health care in retirement will be a challenge, but it is achievable through proper planning.

You can find the full report from HealthView Services here.

 

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