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Where people live, when they retire and which coverage they choose can affect the total cost of health-insurance premiums and out-of-pocket expenses in retirement, according to the 2026 Retiree Health Cost Index from Milliman.

"Health care costs in retirement don't move in a straight line, and 2026 is a good reminder of that," said Robert Schmidt, who cowrote the report. "Out-of-pocket costs are an important part of retirement planning, and how much a person spends will depend on a variety of health and other factors."

The consulting and actuarial firm projects that a healthy 65-year-old couple retiring this year will need to save on average:

  • $418,000 under original Medicare with Medigap Plan G plus Part D coverage, an increase of $30,000 from 2025. This couple is projected to spend an average of $637,000 on health care expenses over the course of their remaining lifetimes.
  • $211,000 with Medicare Advantage plus Part D, an increase of $28,000 from 2025. This couple is expected to spend an average of $320,000 on health care expenses over the same timeframe.

Several factors are driving this year's increases. On the Medigap side, higher Medigap and Medicare Part B premiums and an increase in projected long-term health care inflation are the primary contributors, which are partially offset by lower Part D premiums. On the Medicare Advantage plus Part D side, most states saw premium increases in 2026, reflecting rising medical costs and plan adjustments following changes to Part D. In addition, reduced supplemental benefits and higher cost-sharing requirements are driving increases in expected out-of-pocket costs.

Because so many factors are beyond an individual's control, Milliman encourages them to address variables they can control as they plan for retirement:

  • What is my health status (average, above average or below average), and will that status change over time? What can I do to affect my health status now and in the future?
  • At what age am I going to retire?
  • At what age am I going to enroll in Medicare, and what other types of coverage will I need?
  • Do my health care providers participate in Medicare Advantage plans? If not, am I willing to switch providers to access reduced premiums with Medicare Advantage?
  • Do I want to pay higher premiums for the freedom to see any health care provider I choose, or am I willing to limit my choices to in-network providers to pay lower premiums?
  • Do I want to spend less money on retirement health care plan monthly premiums and take on more risk for out-of-pocket expenses?
  • Where will I live in my retirement years, and how will it affect my health costs?
  • How should I change my retirement savings strategy to pay for the retirement health care plan of my choice?

"By taking a realistic look at your health status and health care expenses as part of your overall retirement plan and budgeting accordingly, you position yourself to enjoy a less stressful, financially healthier retirement," the report concluded.

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