What You Don’t Know About Medicare Can Cost You

For years, rising healthcare costs have been a top concern among Americans in or nearing retirement. High inflation has only made paying for healthcare more challenging, especially for those on fixed incomes. Based on a recent analysis of healthcare costs and inflation, even if current inflation rates are temporary, a short-term spike in inflation can have long-lasting repercussions for healthcare expenses in retirement. That’s because inflation has a compounding effect on these costs where each price jump impacts all future costs. In other words, the bigger this year’s increase, the higher the cost basis for next year’s increase, and so on. For example, assuming healthcare costs grow at 1.5 to 2 times the rate of the consumer price index (CPI) over the next two years (7.9% at the time the analysis was conducted), lifetime health care costs for a healthy 65-year-old couple are projected to grow by $85,000 to a total of $673,587 over their life expectancy.

While estimates for healthcare costs in retirement vary somewhat from one study to the next, all point to the need for people to factor these growing costs into their planning. But what about Medicare? Doesn’t that pay for healthcare in retirement?