BOSTON, MA-According to a study released by FidelityInvestments, a 65-year-old couple retiring in 2011 will need$230,000, on average, to cover medical expenses during retirement.The good news, according to the study, is that this figure is downfrom the $250,000 projection Fidelity made a year ago.

The total amount needed for retirees’ medical expenses had riseneach year since Fidelity made its first calculation of $160,000 in2002. Annual increases have averaged 6%. Fidelity attributes thereduced figure to President Barack Obama’s year-old health careoverhaul, which will reduce many seniors’ out-of-pocket expensesfor prescription drugs.

The projections are part of Fidelity's business helpingemployers design workplace benefits programs. The study is based onprojections for a couple of 65-year-olds retiring this year withMedicare coverage. The estimate factors in the federal program'spremiums, co-payments and deductibles, as well as out-of-pocketprescription costs. The study assumes no employer providedinsurance in retirement, and a life expectancy of 85 for women and82 for men.

The calculation was complicated this year by the health carebill that Obama signed into law in March 2010. Although its focusis expanding health care access to people under age 65, the lawalso will benefit many retirees by gradually closing what's knownas the 'doughnut hole' coverage gap in the Medicare drugbenefit.

Fidelity says that's the key reason why its projection is downthis year. But that effect will run its course. Longer-term,retirees' cost savings aren't expected to offset other factorsdriving expenses up, such as new medical technologies, greater useof health care services, and more diagnostic tests. That's whyFidelity expects its calculation will eventually resume itshistoric pattern of annual increases.

"We expect that trend to continue when we look to 2012 andbeyond," said Sunit Patel, a senior vice president for benefitsconsulting at Fidelity. Fidelity's estimate is a projection of whatan average couple would need. Actual costs will vary widely,depending on a couple's medical needs and how long they live. Theprojection also doesn't factor in most dental services, orlong-term care, such as costs from living in a nursing home.