From cheap to top-dollar: retiree health care costs in 5 states

We’ve all grown accustomed cost differences for basic goods and services. Take most products or services — food, apparel, gasoline or chiropractic care — and you’re likely to observe widely varying prices, not only by provider, but also by locale.

For those entering retirement, one price tag hangs, like a Damocles Sword, above all others because of the damage it can wreak with one’s nest eggs: the cost of health care insurance premiums. As one might expect, key components of this cost — Medicare Part B, Part D and supplemental insurance premiums — also vary by state.

You may be surprised to learn, however, the magnitude of the difference: 30 percent overall. And accounting most for this cost differential, is Medicare supplemental insurance accounts.

So reports HealthView Services, which recently unveiled a new app that lets users compare health care costs by state. Dubbed “HealthView Explorer,” the app is tailored to financial advisors and uses HealthView Services’ advisor- and physician-reviewed methodology to project retirement health care costs. 

The app draws upon data from 50 million health care cases to project health care costs by age and state for individuals retiring at 65. The app shows first year costs associated with this coverage, plus projections over a 20-year retirement.

Which states are comparatively expensive and cheap in the health care market? If you live in Michigan, Florida, Nevada and Maryland then you can expect to pay top-dollar for Medicare Part B, Part D and supplemental insurance premiums. At other end of the spectrum: Hawaii, Vermont and Maine.

The app shows that supplemental insurance (which are set at the state level) is 72 percent more expensive for 65-year-olds in Maryland than for their counterparts Hawaii. Medicare Part D premiums, a smaller component of total costs, vary across states by as much as 74 percent. Federally mandated Medicare Part B does not change by state. 

“Many retirees face important decisions about where they want to enjoy their retirement years,” says HealthView Services Founder and CEO Ron Mastrogiovanni. “This tool helps individuals measure the potential impact on health care costs of relocating in retirement.”

“Retirees who will receive more than $85,000 (individual) or $170,000 (couple) in retirement income will be subject to Medicare surcharges,” he adds. “These additional costs may increase Part B and D premiums above these projections by up to 200 percent. It is also important to realize that retirees will incur significant out-of-pocket costs not covered by Medicare.”

The tables beginning on the next page show first-year and lifetime retiree health care costs in 5 states: Michigan, Hawaii, Florida, Maine and New York. If we’ve piqued your interest, then read on!

The HealthView Explore app shows that a person retiring this year at age 65 in Michigan will spend $3,707 in their first year of retirement, and will have a lifetime projected cost of $152,175 for Medicare Parts B and D and supplemental insurance premiums, assuming a 20-year retirement.

The total for Michigan is nearly $40,000 more than for a retiree in Hawaii, who will pay lifetime projected costs of $112,528 and a first-year cost of $2,818. Again, supplemental insurance premiums to age 84 accounts for most of the cost difference: $77,959 in Michigan vs. $47,890 in Hawaii.