Skip Navigation

Plan for Health Insurance in Retirement

Making sure you're ready for retirement includes more than reviewing 401(k) plan balances and estimating Social Security benefits. To make sure you can retire with confidence, you’ll need to assess the impact health care expenses will have on your retirement income. The subject of increasing health care needs in retirement can be the elephant in the room – hard to ignore and difficult to measure.

While estimates vary, based on the anticipated rise in health care costs, a 2017 study estimated that a couple retiring at age 65 in that year could be expected to need as much as $404,253 to cover Medicare premiums, deductibles, and out-of-pocket fees incurred during retirement – and these costs do not include long-term care expenses at the end of life.*

So what should you do? First, you need to understand your options.


Individuals who have worked at least 40 quarters (i.e., 10 years) during their lifetime, and consequently paid into Medicare through employment taxes, are eligible for Medicare when they reach age 65.

Medicare consists of four different parts: Parts A, B, C, and D. Understanding what each part—or type of plan—covers is crucial. Parts A and B are administered by the federal government and cover the following services:

PART A: Generally no cost for most people

Part A is hospital insurance and generally covers hospital care, a skilled-nursing facility, home health care, and hospice care. Part A coverage is typically free if you have earned your work credits, but you may pay a deductible each year before benefits are provided and co-payments. More details on Part A costs can be found here.

PART B: Less than $134/mo. for most people

Part B is medical insurance that generally covers doctor visits, preventive care, outpatient services at a hospital, laboratory tests, mental health care, some ambulance services, durable medical equipment and some home health care. Part B is optional and requires a monthly premium. Deductibles and co-payments may apply. More details on Part B costs can be found here.

If you are enrolled in Medicare Part A and Part B, you may also purchase a Medicare Supplement Insurance (Medigap) policy. Medigap policies supplement your benefits under Parts A and B and provide additional coverage for the out-of-pocket costs that Medicare does not cover. Some Medigap policies also offer care you might need while traveling outside of the United States. However, these policies do not cover out-of-pocket expenses for prescription drugs, long-term care, dental, vision, hearing aids, glasses or private nursing care.

Like a Medigap policy, Parts C and D are not provided directly by the federal government, but instead by private health insurance companies:

PART C: Varies significantly based on coverage

Part C refers to Medicare-approved health plans. For example, a Medicare Advantage Plan is typically an HMO or PPO that is designed to cover all the same benefits as Medicare Parts A and B but may also offer additional benefits including more robust prescription drug coverage. If you are enrolled in a Medicare Advantage plan, you may pay monthly premiums, deductibles and co-payments.Search for supplemental coverage here.

PART D: Averages under $50/mo. for most people

Part D authorizes separate plans that provide prescription drug coverage, which may also come with additional premiums, deductibles and co-payments. More details on Part D can be found here.


While significantly less common than they once were, retiree health benefits are available to some employees through an employer. If this is the case, Medicare and your retiree health plan will work in tandem, with Medicare generally paying first, and your retiree health plan taking over to provide additional coverage.


If you retire before reaching age 65, you'll need to make alternate arrangements for health care coverage until you're eligible for Medicare. Your first choice would likely be family coverage under your spouse’s health insurance through an employer. If that is not available to you, one option would be to elect COBRA continuation coverage of an employer-sponsored health plan you participated in before your retirement. Keep in mind that your employer may have made a significant contribution toward your premiums while you were working that won’t be available after you leave. You may generally rely on COBRA for 18 months after you leave employment.

Alternatively, you could shop for health insurance coverage on the Health Insurance Marketplace as established by the Affordable Care Act. If your modified adjusted gross income falls below certain thresholds (400% of the federal poverty line), you may be eligible for subsidies to offset the cost of health care coverage. Many couples find that their taxable income falls in retirement, which could open up the possibility of qualifying for more tax benefits.


Your financial advisor can help you take steps to create a health care strategy for retirement, such as:

Quantifying your health insurance needs in retirement. Do you have a chronic disease, such as diabetes, that you know will result in significant health care expenses? Will you be eligible for subsidies that reduce the cost of your coverage?

Identifying the best savings vehicle, whether through a health savings account (HSA) or taxable brokerage account, to begin saving now if you haven't already started.

Reviewing the different types of Medicare and supplemental plans and estimating the costs.


Follow these links to find more information on health insurance in retirement:

•  Medicare
•  COBRA Continuation Coverage
•  The Health Insurance Marketplace and Private Health Insurance at

*HealthView Services, Inc. 2017 Retirement Health Care Costs Data Report, June 2017.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

© 2018 Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.  All rights reserved.