Retiree Healthcare Costs by State: A 2026 Projection
Use this guide to understand the assumptions, inputs, results, and next steps behind the calculator.
Planning for retirement expenses often focuses on housing, travel, and taxes, but healthcare can be one of the largest and most unpredictable costs. For a 65-year-old couple retiring in 2026, total lifetime healthcare costs can easily exceed $300,000. This calculator helps you estimate your annual and lifetime healthcare expenses after age 65, factoring in the significant cost variations between states.
Understanding these costs is a critical step in creating a durable retirement budget. While Medicare provides a foundation, it doesn't cover everything. Your total spending will depend on your health, your choice of supplemental insurance, and, crucially, where you choose to live.
What Retiree Healthcare Costs in 2026
Your total out-of-pocket healthcare spending in retirement is a combination of several key components. While the standard Medicare Part B premium is set federally, the costs for supplemental insurance and other services can vary dramatically by location. This table shows estimated annual costs for a 65-year-old in "Average" health using a comprehensive Medigap Plan G policy.
| State Scenario | Medicare Part B Premium (Annual) | Medigap Plan G Premium (Annual) | Medicare Part D Premium (Annual) | Other Out-of-Pocket (Dental, Vision, etc.) | Total Estimated Annual Cost |
|---|---|---|---|---|---|
| Low-Cost State (e.g., Mississippi) | $2,220 | ~$2,550 | ~$540 | ~$2,000 | ~$7,310 |
| Average-Cost State (e.g., Florida) | $2,220 | ~$3,000 | ~$540 | ~$2,000 | ~$7,760 |
| High-Cost State (e.g., Hawaii) | $2,220 | ~$4,200 | ~$540 | ~$2,000 | ~$8,960 |
Note: These are 2026 estimates for a 65-year-old. Medigap premiums are highly variable and increase with age. These figures do not include costs for long-term care, which should be planned for separately using a long-term care cost calculator.
The Four Pillars of Your Retirement Healthcare Budget
Your total healthcare spending after age 65 isn't a single bill. It's a mosaic of premiums and out-of-pocket costs. Understanding these four components is essential for accurately projecting your needs and ensuring your savings can last. A robust plan will account for each piece.
1. Medicare Part B (Medical Insurance)
This is the cornerstone of your coverage for doctor visits, outpatient care, medical supplies, and preventive services. The standard monthly premium is set by the federal government and is estimated to be around $185 per month ($2,220 annually) in 2026.
However, higher-income retirees will pay more due to the Income-Related Monthly Adjustment Amount (IRMAA). If your modified adjusted gross income from two years prior exceeds certain thresholds, you'll face a surcharge on your Part B (and Part D) premiums. You can estimate this potential extra cost with a dedicated IRMAA calculator.
2. Supplemental Insurance (Medigap or Medicare Advantage)
Original Medicare (Parts A and B) has gaps, including deductibles and a 20% coinsurance for most Part B services with no annual out-of-pocket maximum. To cover these gaps, most retirees choose one of two paths:
- Medigap (Medicare Supplement): These are private insurance plans that work alongside Original Medicare. They pay for some or all of the costs that Medicare doesn't cover, like coinsurance and deductibles. Plans are standardized (e.g., Plan G, Plan N), but prices vary significantly by state and insurance carrier. Medigap provides predictable costs and the freedom to see any doctor who accepts Medicare. This calculator's estimates are based on choosing a Medigap plan.
- Medicare Advantage (Part C): These are bundled, all-in-one plans offered by private insurers that replace Original Medicare. They often include drug coverage (Part D) and may offer extra benefits like dental or vision. They typically have lower premiums than Medigap but use provider networks (like HMOs or PPOs) and have different cost-sharing structures. A FEHB vs. Medicare calculator can be useful for federal employees weighing these options.
3. Medicare Part D (Prescription Drugs)
Coverage for prescription drugs is not included in Original Medicare. You must enroll in a standalone Medicare Part D plan. Premiums, deductibles, and formularies (the list of covered drugs) vary widely by plan and location. The 2026 national average base premium is estimated to be around $45 per month ($540 annually), but your actual cost will depend on the specific medications you take.
4. Out-of-Pocket Costs
This is the "everything else" category and a major source of financial uncertainty. Even with excellent insurance, you will face costs for services that Medicare and most Medigap plans do not cover, including:
- Routine dental care (cleanings, fillings, crowns)
- Eyeglasses and contact lenses
- Hearing aids
- The annual Medicare Part B deductible
- Any copayments or coinsurance, depending on your supplemental plan
These costs are heavily influenced by your personal health. This is why the calculator adjusts this portion of your expenses based on your selected health status. Planning for these costs is a key part of determining your overall retirement number.
Why Location and Health Are Major Cost Drivers
Beyond your choice of insurance plans, two factors—where you live and your overall health—have an outsized impact on your total healthcare spending in retirement. The calculator uses specific adjustment factors to model these effects, giving you a more personalized projection.
The State Cost Index
While Medicare Part B premiums are uniform nationwide (before IRMAA), the private insurance market is not. The primary reason costs differ by state is the price of Medigap plans. Insurers set Medigap premiums based on the local cost of care, state regulations, and the overall health of the local population.
A Medigap Plan G in a high-cost-of-living state like New York or California can cost two or three times as much as the identical plan in a low-cost state like Alabama or Arkansas. This calculator applies a State Cost Index to the total premium and out-of-pocket costs to reflect these geographic differences. This is also a crucial factor to consider when evaluating different states for retirement, similar to how one might use a pension tax by state calculator to assess overall financial friendliness.
The Health Status Factor
Your health has a direct and significant impact on your out-of-pocket spending. While Medigap premiums for new enrollees at age 65 are not based on health history, your usage of non-covered services is. The calculator models this with a simple multiplier:
- Excellent Health: Assumes your out-of-pocket costs for things like dental, vision, and copays will be about 20% lower than average.
- Average Health: Uses the baseline estimate for out-of-pocket costs (around $2,000 per year in 2026).
- Poor Health: Assumes your out-of-pocket costs will be about 50% higher than average due to more frequent specialist visits, more complex dental needs, or other uncovered medical expenses.
Being realistic about your potential health needs is key to creating a spending plan that won't be derailed by unexpected medical bills. This helps determine how long your money will last in retirement.
How Your State-Specific Healthcare Costs Are Calculated
The calculator estimates your future healthcare costs by combining several key components and projecting them forward with inflation. The core formulas are designed to provide a realistic starting point for your budget.
The first step is to calculate the total annual cost in the first year of retirement (at your specified retirement age).
First-Year Annual Cost = (Annual Medicare Part B Premium + Annual Medigap Premium + Annual Part D Premium + (Base Additional OOP × Health Status Factor)) × State Cost Index
Where:
- Annual Medicare Part B Premium = The 2026 estimated standard premium, around $2,220.
- Annual Medigap Premium = The premium for your selected plan (e.g., Plan G or Plan N), which varies by state.
- Annual Part D Premium = The estimated premium for prescription drug coverage.
- Base Additional OOP = The baseline estimate for non-covered costs like dental and vision, around $2,000.
- Health Status Factor = A multiplier based on your health (e.g., 0.8 for Excellent, 1.0 for Average, 1.5 for Poor).
- State Cost Index = A multiplier that adjusts total costs based on your chosen retirement state's healthcare prices.
To project costs into the future, the calculator applies your assumed healthcare inflation rate to the first-year cost.
Future Annual Cost = First-Year Annual Cost × (1 + Healthcare Inflation Rate) ^ Years Since Retirement
Where:
- First-Year Annual Cost = The result from the first formula.
- Healthcare Inflation Rate = The annual percentage you expect healthcare costs to increase. This is often higher than general inflation.
- Years Since Retirement = The number of years that have passed since your retirement age.
The calculator then sums these future annual costs to provide a total lifetime nominal cost, which is a powerful number for understanding the full financial scope of healthcare in your retirement withdrawal strategy.
Frequently Asked Questions
Quick answers to the questions people usually have after running the retirement calculator.
1What is Medigap and why do I need it?
Medigap, or Medicare Supplement Insurance, is private insurance that helps pay for the "gaps" in Original Medicare, such as your 20% coinsurance for doctor visits and hospital stays. Without it, you would have no annual limit on your out-of-pocket medical costs, exposing you to significant financial risk.
2Does everyone pay the same for Medicare Part B?
No. While there is a standard premium ($185/month estimated for 2026), higher-income retirees pay more due to the Income-Related Monthly Adjustment Amount (IRMAA). The Social Security Administration determines your premium based on the modified adjusted gross income reported on your tax return from two years ago.
3Is Medigap Plan G better than Plan N?
Plan G is more comprehensive, covering nearly all out-of-pocket costs after you meet the annual Part B deductible. Plan N has lower premiums but requires you to pay small copays for some doctor and emergency room visits. Plan G is often preferred by those who want maximum predictability, while Plan N can be a good value for those willing to accept some cost-sharing.
4Are retiree healthcare premiums tax-deductible?
You may be able to deduct medical expenses, including premiums for Medicare, Medigap, and Part D, if you itemize deductions and your total medical expenses exceed 7.5% of your adjusted gross income (AGI). This can be a high threshold to meet. Consulting a tax professional is recommended.
5Why are costs so much higher in states like New York or Massachusetts?
The primary driver is the cost of Medigap policies. Insurers in these states face higher local costs for medical services, different state-level regulations, and sometimes older or less healthy insurance pools, all of which lead to higher premiums for consumers.
6How much should I save specifically for healthcare in retirement?
A good starting point is to use this calculator to estimate your total lifetime cost. Many people use a Health Savings Account (HSA) during their working years to save for these expenses tax-free. You can project the future value of your account with an HSA investment growth calculator.
7What if I choose a Medicare Advantage plan instead of Medigap?
Medicare Advantage plans are an alternative way to receive your Medicare benefits. They often have lower (or even $0) premiums but use provider networks and have different copay/coinsurance structures. Your total annual costs can be less predictable than with Medigap and may be higher in a year with significant health issues. This calculator focuses on the Medigap path due to its cost predictability.
Next Steps
Estimating your healthcare costs is a vital part of building a comprehensive retirement plan. Use the results from this calculator as a line item in your overall budget to see how it affects your savings and withdrawal plans.
From here, you can use the retirement healthcare cost calculator for a more detailed breakdown, or input your estimated annual healthcare expense into a broader tool like the retirement needs calculator to see how it impacts your total savings goal. For those exploring early retirement, a FIRE calculator can help model the unique healthcare bridge costs before Medicare eligibility.
Last updated: July 2026