Consulting actuaries at Milliman have surprising news for Americans saving for retirement: The typical cost of paying for acute health care after age 65 might be falling.
Robert Schmidt and Eric Walters have raised that possibility in the latest Milliman Retiree Health Cost Index report.
For a typical couple that retires at age 65 and uses Medicare supplement insurance to fill in the coverage holes in the "original Medicare" program, the lifetime cost of Medicare supplement insurance premiums, Medicare Part D prescription drug plan premiums and out-of-pocket expenses could be $388,000, the actuaries suggest. That's down 1.8% from what Milliman estimated in 2024.
For a similar couple that's willing to use Medicare Advantage plan coverage, and to stick to seeing doctors and hospitals within the plan's provider network and accept the plan's care management efforts, the total cost of insurance premiums and out-of-pocket expenses might be $183,000, up 0.5% from the 2024 estimate.
The actuaries see new Part D program rules helping to hold down post-retirement health care costs by cutting the cost of stand-alone drug plan premiums and the cost of the drug coverage bundled into most Medicare Advantage plans.
What it means: If everything stays the same, the cost of one major component of post-retirement spending could fall.
Actuaries: Actuaries are people who have taken tests to show that they know the math needed to understand situations that involve risk and uncertainty.
The cost estimates: One limitation of the new cost projections is that they exclude the cost of nursing home care and other forms of long-term care.
Milliman emphasizes that the projections also exclude the impact of many possible sources of uncertainty, such as the possibility that Medicare program rules could change.
The competition: Fidelity recently increased its estimate of what a typical U.S. resident who retires at age 65 will need to pay Medicare premiums and out-of-pocket expenses to $172,500.
That's up 4.5% from what Fidelity estimated in 2024.
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