Health care costs keep climbing faster than most other prices. Over the last ten years, medical costs have grown about 4.5% a year, while everyday prices have grown closer to 2%. Even Medicare, the program most retirees count on, only pays for about two thirds of approved costs. That leaves you to cover the rest through premiums, deductibles, copays, and long-term care bills.
A little planning goes a long way. If you know what to expect and start early, you can protect your savings and still enjoy your retirement years. Here are nine tips to help you manage health care costs as you plan for the future.
Tip 1: Add Up Your Total Health Care Costs
Before you can plan, you need a clear number to plan around. Start by listing your expected premiums, deductibles, copays, prescription costs, and possible long-term care costs. A 65-year-old couple needs close to $351,000 saved to have a good chance of covering health care for the rest of retirement, according to research from the Employee Benefits Research Institute.
Once you have a rough total, break it down by category so nothing catches you off guard:
- Premiums for Medicare Part B run about $175 a month in 2025
- The Part A hospital deductible is $1,632 per benefit period
- Part B has a yearly deductible of $226, plus 20% coinsurance on many services
- Most retirees spend $1,200 to $1,500 a year on prescriptions
- A year in a nursing home can cost more than $100,000
Review these numbers every year. Costs change, and so might your health.
Tip 2: Put Money Into a Health Savings Account
A Health Savings Account, or HSA, is one of the best tools for covering future medical bills. If you have a high deductible health plan, you can put money into an HSA before taxes, let it grow tax free, and take it out tax free for medical costs. Many people don’t use all their HSA money each year, so it can grow for decades.
For 2025, you can contribute up to $4,300 for yourself or $8,550 for a family plan. If you’re 55 or older, you can add another $1,000. Try to contribute the full amount early in the year so your money has more time to grow. Keep your medical receipts too, since you can pay yourself back for old expenses even years later.
Tip 3: Learn the Medicare Basics
Medicare has four parts, and each one covers something different. Part A covers hospital stays and has no monthly premium for most people. Part B covers doctor visits and costs about $175 a month in 2025. Part C, called Medicare Advantage, bundles everything into one plan through a private insurer. Part D covers prescription drugs and usually costs $33 to $40 a month.
Timing matters a lot here. Your Initial Enrollment Period starts three months before you turn 65 and ends three months after. If you miss this window and don’t qualify for an exception, your premium can go up by 10% for every year you wait. Mark your calendar so you don’t miss it.
Tip 4: Look Into a Medigap Plan
Original Medicare doesn’t cover everything. A Medigap plan fills in some of the gaps, like coinsurance and extra hospital days. These plans work alongside Medicare, not instead of it, so you can still see any doctor who accepts Medicare.
Medigap plans are labeled by letter, like Plan G or Plan N, and the benefits are the same no matter which company sells them. Only the price changes. Plan G tends to cover more, while Plan N has a lower monthly cost but small copays for office visits. Your best time to buy is during the six month window that starts the month you turn 65 and enroll in Part B. During this time, insurers can’t turn you down or charge you more because of health problems.
Tip 5: Plan Ahead If You Retire Before 65
If you stop working before you turn 65, you won’t have Medicare yet, so you’ll need another way to stay covered. A few common options can bridge that gap:
- COBRA lets you keep your old employer plan for up to 18 months, though you’ll pay the full cost yourself
- ACA marketplace plans offer coverage at different price levels, and many people qualify for a discount based on income
- A working spouse’s plan may be able to cover you as a dependent
- Some employers offer retiree health plans, so it’s worth asking your HR department
Start looking into these options at least six months before you plan to retire. That gives you time to compare costs and avoid a coverage gap.
Tip 6: Prepare for Long-Term Care
Most people don’t expect to need long-term care, but about 70% of people turning 65 will need some kind of help later in life. This could mean a home health aide, a stay in an assisted living facility, or full nursing home care. Since nursing home care often costs over $100,000 a year, this is one of the biggest risks to a retirement budget.
You have two main types of coverage to consider. A traditional long-term care policy pays a set benefit for care but has no payout if you never use it. A hybrid policy combines life insurance with long-term care coverage, so your family gets a payout either way. Buying coverage in your 50s or early 60s usually means lower premiums and an easier approval process, so it pays to plan ahead instead of waiting.
Tip 7: Focus on Prevention and Healthy Habits
Staying healthy is one of the easiest ways to keep medical costs down. Regular screenings can catch problems early, before they turn into expensive treatments. Most of these screenings, along with flu shots and other vaccines, are fully covered by Medicare and many employer plans, so there’s no reason to skip them.
Small daily habits matter too. Try to get about 150 minutes of movement each week, whether that’s walking, swimming, or light strength training. Eating more home-cooked meals with vegetables and lean protein can also help lower your risk for heart disease and diabetes. If you already manage a condition like high blood pressure, ask your doctor about home monitoring tools or telehealth checkups, since these often cost less than an office visit.
Tip 8: Use Tools That Lower Your Costs
A few simple tools can save you real money on health care without changing your coverage. Telehealth visits often cost less than in-person visits and work well for minor issues, prescription refills, or mental health checkins. Look for a provider that’s included in your plan’s network before booking a visit.
Prescription costs add up fast, so it helps to compare prices before every refill:
- Ask your doctor about generic versions, which often cost far less than brand name drugs
- Use a discount app or card to compare prices at different pharmacies
- Consider a 90-day mail order supply for medications you take regularly
- Check if the drug maker offers a savings program for costly medications
If your employer offers a flexible spending account or a wellness stipend, use it. These accounts let you set aside pre-tax money for medical costs, gym memberships, or wellness programs.
Tip 9: Get Help From a Fiduciary Advisor
Retirement health planning can get complicated fast, especially once retirement plan rules and tax questions come into play. A fiduciary advisor is required to act in your best interest, which sets them apart from advisors who may earn commissions on certain products. They can help manage your retirement accounts, keep your plan compliant with federal rules, and make sure your investment choices fit your goals.
When you’re choosing an advisor, ask if they hold a formal fiduciary role, how their fees work, and whether they’re independent from any one insurance company or fund provider. A clear answer to each of these questions is a good sign you’re working with someone trustworthy.
Start With One Step Today
You don’t need to tackle all nine tips at once. Pick one or two to start, like building out your health care budget or checking your HSA contribution for the year. From there, work through Medicare enrollment, Medigap options, and long-term care planning at your own pace. Each step you take now makes retirement a little more secure.
If you want help putting a full plan together, reach out to a fiduciary advisor who can walk through your options with you and build a strategy around your specific situation.
Frequently Asked Questions
How much should I save for health care in retirement? A 65-year-old couple typically needs around $351,000 to have a strong chance of covering health care costs through retirement, though your actual number depends on your health and where you live.
When should I sign up for Medicare? Your Initial Enrollment Period starts three months before you turn 65 and lasts seven months total. Signing up during this window helps you avoid late penalties.
Is a Medigap plan worth the extra cost? For many retirees, yes. A Medigap plan can lower your out-of-pocket costs significantly, especially if you expect frequent doctor visits or hospital stays.
What happens to my HSA after I turn 65? You can still use your HSA tax free for medical expenses. You can also withdraw funds for other expenses without penalty, though you’ll owe regular income tax on that portion.
How do I know if I need long-term care insurance? Consider your family health history, your support network, and where you plan to live. Since most people need some form of long-term care eventually, buying coverage in your 50s or early 60s while premiums are lower is often a smart move.
