In 2022, a healthy 65-year-old man with a Medicare Advantage plus Part D (MAPD) plan is projected to spend $137,000 in healthcare expenses in his remaining lifetime, according to Milliman’s 2022 Retiree Health Cost Index, released Sept. 22.
The same retiree covered by Original Medicare with Medigap (Plan G) and Part D (standard benefit) is projected to spend $264,000 on healthcare expenses in his remaining lifetime.
The index from Seattle-based global consulting and actuarial firm Milliman projects the total premiums and out-of-pocket expenses a healthy 65-year-old can expect to spend on medical and prescription drug costs in retirement. The report also looks at cost variations across sex, geography, and the two most common coverage options for Medicare-eligible retirees.
For a woman retiring at age 65, Milliman projects she will spend $158,000 on healthcare expenses over the remaining course of her lifetime if covered by an MAPD plan. That cost increases to $300,000 with Original Medicare plus Medigap (Plan G) and Part D (standard benefit) coverage. Higher healthcare costs for women are largely the result of longer life expectancy when compared to men.
“Healthcare costs are an important, and sometimes overlooked, component of overall retirement planning”
Milliman’s Robert Schmidt
“There are a wide variety of reasons that healthcare expenses for retirees can differ—geography, coverage type, and age at retirement are just a few of the variables,” says Robert Schmidt, a principal at Milliman and co-author of the Retiree Health Cost Index. “Healthcare costs are an important, and sometimes overlooked, component of overall retirement planning, and it’s important for retirees to understand the options available to them and make the best decisions for both their health and finances.”
The 2021 Milliman Index found that a healthy 65-year-old couple retiring in 2021 was projected to spend $352,000 in 2021 dollars over the rest of their lifetime. In 2020, Milliman estimated a healthy 65-year-old couple retiring that year would spend approximately $351,000 in 2020 dollars ($535,000 in future dollars) on healthcare over their lifetime, down from a $369,000 projection in the 2019 report.
The Retiree Health Cost Index includes key differences in coverage between Medigap and Medicare Advantage, along with a look at how healthcare costs might vary based on the state a retiree lives in and when the person retires.
To view the complete Retiree Health Cost Index, go to https://www.milliman.com/en/insight/retirement-planning-health-cost-index.
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