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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteBuild your retirement health-care budget as a year-by-year schedule, not as one lifetime guess. For each person, list premiums, deductibles, copayments, coinsurance, prescriptions, excluded services and coverage changes. Use current Medicare and plan documents for a baseline, then run several clearly labeled cost scenarios rather than applying one universal inflation rate. In 2026, the standard Medicare Part B premium is $202.90 per month and the Part B deductible is $283; other costs depend on income, coverage, services, providers and where you live.
Start with a household timeline
Your first worksheet should show who needs coverage, when and through which source. Create one line for every household member and one column for every calendar year from the last working year through a long-retirement planning horizon.
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- Record each person’s expected retirement date and age when Medicare eligibility begins.
- Enter the state of residence and whether a spouse, dependent or retiree will remain on an employer plan.
- Identify the expected coverage source: employer coverage, an individual plan before Medicare, Original Medicare, Medicare Advantage, Medigap, Part D or retiree coverage.
- Mark the exact date each policy starts or ends. A partial year can contain overlapping premiums, deductibles or enrollment changes.
- Ask the employer benefits administrator whether retiree coverage requires enrollment in Part A and Part B, whether its prescription coverage is creditable, and how a spouse or dependent’s coverage changes if the worker retires.
Do not assume an employer will provide retiree medical benefits. Obtain the plan’s written rules and keep them with your budget. If retirement occurs before age 65, make the pre-Medicare period a separate scenario; its premiums, subsidies, deductibles and provider rules are not the same as Medicare’s. Also flag any possible enrollment penalty or late-enrollment consequence so it is not missed during a coverage transition.
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A useful budget distinguishes a bill you can schedule from a bill triggered by illness or treatment. For each person and year, enter the following categories separately.
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Recurring premiums
List Medicare Part B, Part D, Medicare Advantage or Medigap premiums, employer retiree premiums and any pre-65 coverage premium. Record whether the amount is monthly or annual and whether it is deducted from Social Security, paid to an insurer or paid through an employer. The Part B premium is due even in a month when no Part B service is used. For a 2026 baseline, $202.90 each month equals $2,434.80 over twelve months before any income-related adjustment or other plan premium.
Deductibles and cost sharing
Budget deductibles, copayments and coinsurance independently. A plan’s annual out-of-pocket maximum is a ceiling for covered services, not a forecast that you will spend that amount. Use a routine-use case and a high-use case so the budget does not confuse a limit with an expected bill. Note whether the deductible resets by calendar year, benefit period or another plan-defined interval.
Prescription drugs
Enter the drug-plan premium, each medicine’s expected cost under the selected formulary and pharmacy, and any deductible or coinsurance. Drug costs can change when a prescription, pharmacy or plan changes. Drug tiers, preferred pharmacies and coverage restrictions can alter the result even when the prescription itself is unchanged. Keep Part D spending in its own line because its annual limit applies to covered prescription drugs, not to every health expense.
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Services and items that may be excluded
Create separate lines for dental care, vision, over-the-counter medicines, hearing-related costs, transportation and long-term care. These items can be material even when medical insurance is working as designed. Fidelity’s 2025 retiree estimate expressly excluded over-the-counter medications, most dental services and long-term care, so a benchmark based on that estimate cannot silently stand in for these categories. Add expected frequency, such as an annual dental visit or recurring transportation, rather than leaving every excluded item as an unexamined lump sum.
Turn the worksheet into a cash-flow calendar
An annual total is useful, but bills arrive at different times. Add a monthly or quarterly cash-flow view beneath the annual schedule. Put recurring premiums in the month they are withdrawn, then place known appointments, prescription refills, insurance renewals and expected deductible payments in the periods when they are likely to occur. Keep a separate reserve line for unpredictable treatment rather than spreading a high-use limit evenly across twelve months.
Show which costs are paid from Social Security deductions, an HSA, an employer account or ordinary checking. This does not change the expense, but it prevents a budget from counting the same payment twice or assuming that a tax-advantaged account will cover an item it does not. Reconcile the calendar against actual statements during the year and carry unexplained differences into the next update.
Use 2026 Medicare amounts as a dated baseline
Medicare costs vary with coverage, plan design, services, providers and other insurance. The following figures are 2026 amounts published by the Centers for Medicare & Medicaid Services and should be replaced with current values when you update the plan.
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| Item | 2026 amount | How to use it |
|---|---|---|
| Standard Medicare Part B premium | $202.90 per month | Recurring premium; higher income-related premiums may apply. |
| Part B deductible | $283 per year | Enter as potential annual cost sharing before coinsurance rules are applied. |
| Part A hospital deductible | $1,736 per benefit period | A benefit period is not necessarily a calendar year, and more than one can occur. |
| Part D out-of-pocket limit | $2,100 per year | Applies to covered prescription drugs in 2026, not to all health-care spending. |
Original Medicare generally has no annual out-of-pocket limit. A person can reduce that exposure with supplemental coverage such as Medigap or by enrolling in Medicare Advantage, but the terms and costs differ. Medicare Advantage plans set their own covered-service deductibles, copayments, coinsurance and annual limits. A plan’s limit applies only to covered services and does not turn excluded care into covered care.
Keep the date beside every figure. Medicare amounts, plan premiums and cost-sharing rules can change for a new year. When you refresh the worksheet, preserve the prior year’s column so you can see whether a change came from a new premium, different utilization or a coverage switch. The CMS figures above are planning inputs, not guarantees of a person’s final bill.
Compare coverage by total exposure, not just by premium
When you compare Original Medicare with supplemental coverage or Medicare Advantage, put the options side by side for the person’s location and expected care. A low premium can be offset by cost sharing, a narrow network or uncovered services.
| Comparison point | Questions for the budget |
|---|---|
| Total premiums | What are the Part B premium and the plan premiums together, and are any income-related amounts possible? |
| Cost sharing | What are the deductible, copayment and coinsurance for the services this person is likely to use? |
| Annual limit | Does the option have an annual covered-service maximum, and which services count toward it? |
| Doctors and facilities | Do preferred doctors accept assignment or participate in the plan network, and what happens outside it? |
| Prescription coverage | Are the medicines on the formulary, which pharmacy is preferred, what deductible applies and how does spending reach the 2026 Part D limit? |
| Benefits and exclusions | Are dental, vision, hearing, transportation or other expected services included, limited or excluded? |
| Other insurance | How does employer or retiree coverage coordinate, and could choosing different drug coverage change existing benefits? |
Use Medicare’s plan-comparison information for the person’s county and expected services, then read the plan documents. Network rules, extra benefits, service frequency and cost-sharing tiers can make two plans with similar premiums produce very different annual budgets. Check whether preferred doctors accept assignment under Original Medicare and verify every important specialist, hospital and pharmacy rather than relying on a general network label.
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If someone retires before 65, the pre-Medicare period deserves its own annual calculation. List the actual available policy premium, deductible, coinsurance, copayments, prescription costs and out-of-pocket maximum for each year. Recheck eligibility for any income-based assistance under current rules, because a change in taxable income can change the premium or subsidy.
Include the date employment coverage ends and the date new coverage begins. A gap of even one month can expose the household to full medical bills. Confirm continuation rights, individual-market enrollment windows and dependent coverage directly with the employer or insurer rather than assuming that a spouse’s plan will continue unchanged. If retirement is phased, create a separate column for each coverage phase and record which worker remains eligible for an employer plan.
Model rising costs without inventing a universal inflation rate
Health-care prices, premiums, formularies and plan rules change, but there is no single rate that accurately predicts every household’s future medical spending. Build scenarios from today’s documented amounts and disclose each assumption.
Scenario 1: current-plan baseline
Carry the current premium and cost-sharing figures forward only as a reference point. Label the figures as 2026 amounts (or the applicable current year), not as a promise that they will remain unchanged.
Scenario 2: higher premium and routine-use case
Apply your chosen increase assumption to recurring premiums and expected routine services. Keep the assumption visible in a separate cell and use the same method consistently so you can replace it when new plan documents arrive. You may use different assumptions for premiums, prescriptions and excluded services, provided each is clearly identified rather than hidden inside one blended percentage.
Scenario 3: high-use or coverage-shock case
Model a year that reaches the applicable covered-service out-of-pocket limit, includes more prescriptions or contains multiple Part A benefit periods. Do not treat the limit as a likely bill; use it to test whether cash reserves can withstand an unusually expensive covered year. Add a separate long-term-care scenario because custodial costs generally fall outside those medical limits.
Run scenarios separately for premiums, prescriptions, routine care, high-cost treatment and excluded services. This prevents a broad “health inflation” percentage from hiding the categories that actually drive your risk. Update the schedule during Medicare open enrollment and whenever a medication, employer benefit, address or plan changes. Verify new CMS amounts each year rather than mechanically escalating an old figure.
Keep long-term care outside the ordinary Medicare calculation
Long-term care is assistance with activities of daily living and related support, such as dressing, bathing, toileting, meals, adult day health care and transportation. Most long-term care is non-medical. Medicare and most health insurance, including Medigap, generally do not cover it.
Put long-term-care risk in a separate scenario or planning decision. Possible funding sources include personal assets, private long-term-care insurance or Medicaid for people who meet their state’s eligibility rules. Investigate those options based on your health, assets, state and family circumstances. Do not confuse custodial long-term care with short-term skilled nursing facility coverage that may follow a qualifying medical event; they are different benefits with different rules.
Use the Fidelity estimate as a benchmark, not a target balance
Fidelity Investments’ 2026 Retiree Health Care Cost Estimate projects an average $185,500 of health-care and medical expenses throughout retirement for a 65-year-old retiring in 2026. It is a planning benchmark, not a yearly bill, a personalized forecast or an amount every retiree must hold in cash on the retirement date.
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The estimate’s boundaries matter. Fidelity’s 2025 estimate excluded over-the-counter medications, most dental services and long-term care. Your worksheet should show those omissions explicitly and add the categories that apply to your household. Actual spending can differ with health, longevity, location, retirement timing, taxes, insurance choices and the accounts used to pay expenses. Use the figure as a reason to test your plan, not as a substitute for entering your own premiums and expected services.
As Shams Talib, head of Fidelity Workplace Consulting, said in a July 21, 2026 release: “Whether Americans fully stop working, phase into their retirement, or pursue new ways to stay engaged, health care consistently remains one of the largest expenses they will face. Providing a benchmark to consider can help them plan with purpose and more confidence.”
Review tax-advantaged savings and assistance programs
Health savings accounts
An HSA can be a tax-advantaged way to save for qualified health expenses when a person is eligible to contribute. Fidelity says HSA balances roll over annually and can be saved for future qualified costs. Eligibility, contribution limits, qualified expenses, investment choices and tax treatment depend on current law and the account documents. Check current official tax guidance and your plan documents before contributing or reimbursing expenses; an HSA is not a substitute for a complete insurance budget. List the HSA as a potential payment source, but retain the full expense in the worksheet so future medical needs remain visible.
Medicare cost assistance
People with limited income and resources may qualify for help with Part A or Part B costs or for Extra Help with prescription-drug costs. Treat these programs as possibilities to investigate, not as guaranteed reductions. Eligibility and application rules depend on the person’s circumstances and, for some programs, state administration. Record assistance only after eligibility and the award are confirmed, and rerun the budget if income or household composition changes.
Make the worksheet an annual process
- During the current year: record actual premiums, prescriptions, visits, deductibles and other out-of-pocket payments by person.
- Before enrollment decisions: download current plan documents, confirm provider participation, check each medicine’s formulary and pharmacy price, and note annual limits and exclusions.
- At every coverage transition: write the start and end dates, confirm whether Part A and Part B enrollment is required, and ask the employer benefits administrator how drug coverage coordinates.
- After selecting coverage: replace estimates with the new premium, deductible, copayment, coinsurance and out-of-pocket figures. Keep the prior year’s worksheet so changes are visible.
- At least once a year: rerun the baseline, routine-use and high-use scenarios; refresh the Part B, Part A and Part D figures; and reassess dental, vision, over-the-counter and long-term-care lines.
- When circumstances change: update immediately after a move, retirement-date change, new diagnosis, expensive prescription, spouse’s job change or loss of employer coverage.
Common budgeting mistakes to avoid
- Using one lifetime number: a projected total such as $185,500 cannot show which years require cash or which categories are excluded.
- Budgeting only the Part B premium: premiums are only one component; deductibles, cost sharing, prescriptions and uncovered services can be substantial.
- Treating an out-of-pocket maximum as expected spending: it is a cap for specified covered services, not a forecast and not a cap on excluded care.
- Assuming Medicare covers long-term care: most custodial care is outside Medicare and Medigap.
- Ignoring benefit periods: the Part A deductible is $1,736 per benefit period in 2026, and a benefit period is not necessarily a calendar year.
- Carrying forward old plan terms: premiums, networks, formularies and limits can change; use current documents and location-specific comparisons.
- Overlooking income-related premiums: the standard Part B amount is $202.90 per month in 2026, but higher-income beneficiaries may pay more.
- Assuming retiree coverage is automatic: verify enrollment requirements, creditable drug coverage and dependent rules with the benefits administrator.
- Mixing covered and excluded care: keep dental, over-the-counter items, transportation and long-term care visible even when a plan advertises an annual maximum.
- Forgetting timing: annual totals can hide a premium overlap, an early-year deductible or a month without coverage.
The result should be a living schedule: one row per person and year, separate lines for predictable and variable costs, explicit exclusions, and several scenarios for future changes. That structure gives you a usable cash-flow plan without pretending that Medicare or a national estimate can predict an individual household’s medical future.
Frequently Asked Questions
What does Medicare cost in retirement?
Costs include recurring premiums and variable cost sharing. In 2026, the standard Part B premium is $202.90 per month and the Part B deductible is $283. Part A has a $1,736 hospital deductible per benefit period, while Part D has a $2,100 limit for covered prescription-drug spending. Income, plan choice, services and other insurance can change the total.
Does Medicare have an annual out-of-pocket maximum?
Original Medicare generally does not have an annual limit unless you add supplemental coverage such as Medigap or enroll in Medicare Advantage. Medicare Advantage plans set their own covered-service limits. Any limit applies only to covered services, not excluded care.
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How much should I budget for health care before Medicare?
Build a separate pre-65 schedule using the actual available policy premium, deductible, copayments, coinsurance, prescriptions and out-of-pocket maximum for each year. Confirm coverage start and end dates, assistance eligibility and dependent rules with the insurer or employer instead of using Medicare amounts as a substitute.
Does Medicare cover long-term care?
Medicare and most health insurance, including Medigap, generally do not cover most non-medical long-term care, such as help with bathing, dressing, meals or transportation. Plan for this risk separately and investigate personal assets, private long-term-care insurance or Medicaid eligibility under state rules.
What is Fidelity’s $185,500 retirement health-care estimate?
Fidelity Investments’ 2026 estimate is an average projected lifetime total for health-care and medical expenses for a 65-year-old retiring in 2026. It is not a yearly bill, personalized forecast or required cash balance. Fidelity’s 2025 estimate excluded over-the-counter medications, most dental services and long-term care.
How often should a retirement health-care budget be updated?
Review it at least annually, especially during Medicare enrollment decisions. Refresh premiums, deductibles, formularies, networks, limits and exclusions, and update immediately after a move, retirement-date change, new prescription, employer-coverage change or other major circumstance.
Can an HSA pay for retirement health expenses?
An HSA may provide tax-advantaged savings for qualified expenses when the account holder is eligible under current law. Balances roll over, but contribution rules, eligible expenses and tax treatment depend on law and plan documents. Verify current official guidance before contributing or reimbursing costs.
The Bottom Line
Build a dated, person-by-person schedule that separates premiums, cost sharing, prescriptions and excluded care. Use 2026 Medicare figures and the Fidelity benchmark only as reference points, model routine and high-use scenarios, and refresh the worksheet whenever coverage or circumstances change.
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