Healthcare is one of the largest expenses in retirement. Medicare covers a lot, but it is not free or comprehensive.
The parts of Medicare
Part A covers hospital care and is premium-free for most people with 40 work credits. Part B covers doctor visits and outpatient care for a monthly premium. Part C, Medicare Advantage, bundles coverage through private plans. Part D covers prescriptions. Medigap policies help pay costs that original Medicare leaves.
Costs to budget
Expect premiums, deductibles, coinsurance and prescription costs. Higher-income retirees pay income-related monthly adjustment amounts, or IRMAA, on Parts B and D. Original Medicare has no out-of-pocket cap, which is why many add Medigap or choose Medicare Advantage.
Planning ahead
Enroll during your initial enrollment period around age 65 to avoid permanent late penalties. If retiring before 65, plan for coverage through COBRA, a spouse or the ACA marketplace. An HSA built during working years can pay qualified medical costs tax-free.
Try the numbers
Use our Long-Term Care Cost Calculator to see this in practice. With its default example (Your age: 50; Age care may start: 82; Annual cost today: $85,000), it shows total projected cost: $930,814. Adjust the inputs to match your situation.
Key takeaways
- Medicare is not free and does not cover everything.
- Enroll on time to avoid lifetime penalties.
- Budget separately for long-term care.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.