Is Health Insurance Crazy Expensive in Retirement?

Retirement Mar 12, 2019

Health insurance is a controversial matter in the United States. Because of issues such as universal health care and the clash of public versus private programs, and other bipartisan topics. However, people do deserve access to affordable health insurance. Health insurance, after all, is a crucial concern for retirement due to the complications of old age, including a higher risk of health problems.

What is Medicare?

Medicare is the federal government program that provides health insurance for people 65 and older. People younger than 65 generally do not have access to Medicare. Although, there are other ways to get access to Medicare, we will not be talking about them.

As of early 2019, Medicare can be divided into 4 parts:
- Part A: hospital insurance
- Part B: medical insurance
- Part C: private health insurance and will include Part A and Part B with different rules and costs
- Part D: prescription drug insurance

Bear with me, I know it can be confusing. The above is official terminology used by the government and unfortunately we will have to do our best to understand it.

Ideally, most of us should have Part A (hospital), Part B (medical), and Part D (prescription drug insurance). As we get older, we will have a higher chance of injury and sickness and these three parts are a must.

The plan offered by the government is referred to as Original Medicare and includes:
- Part A: hospital insurance
- Part B: medical insurance

But does not include:
- Part D: prescription drug insurance
- Vision care insurance
- Dental care insurance

For most of us, Original Medicare is not enough. We will need prescription drugs, vision care, and dental care insurance. Part C (Medicare Advantage) is private health insurance that can provide all of the above and more.

Private health insurance companies will partner with the federal government to provide insurance. Medical Advantage must include part A (hospital) and part B (medical) insurance and will usually include part D (prescription drug) insurance.

More coverage means a higher monthly premium (the amount paid each month). This premium will be worth it considering the insane cost of healthcare in the United States.

How much does Medicare cost?

Original Medicare and Medicare Advantage both have low-income assistance programs, which can help with the cost of health insurance.

We will not take low-income into account here. If you are depending on low-income programs, chances are that you have not saved and invested enough for retirement.

We want to avoid the low-income situation and live comfortably in retirement.


The above chart is a gross oversimplification of how much health insurance costs each year for one individual in New York (other states are available on We can consider it a minimum of what health insurance would cost each month.

Original Medicare, which only includes Part A and Part B, roughly costs $135.50 - $460.50/month. Part B is directly correlated to income levels, which means the wealthy will pay more.

Medicare Advantage, (Part C) which can include Part A, Part B, Part D, vision, and dental, is anywhere between $356.50 - ∞/month. The sky’s the limit here.

The monthly premium is one part of the health insurance cost. The other part is the yearly out-of-pocket maximum, which is the most you will pay each year for health services. For the most part, anything above the out-of-pocket maximum is covered by your insurance.

Both the monthly premium and yearly out-of-pocket maximum depend on location, amount of coverage, income, medical conditions, drugs, and more.

Here are a few Part C plans that include dental, vision, and prescription drug insurance for one individual. For each plan, I listed the maximum yearly cost.


You probably will not pay the maximum yearly cost every year; it is the worst case scenario. When it comes to your health in old age, it is better to be safe than sorry.

It is extremely difficult to predict the cost of health insurance before you retire, but having an idea helps prepare for retirement and prevent disasters.

If you qualify for Social Security then you qualify for FREE Part A (hospital insurance). You can also file for Medicare three months before your 65th birthday through the Social Security Administration.

What if I retire before 65?

The earliest age to retire and receive Social Security payout, income from the government to help us during retirement, is 62. We have to figure out what to do between 62 - 65.

It is important to have health insurance during those three years. Two popular options are:
- Working spouse with family insurance subsidized by company
- ObamaCare or Patient Protection and Affordable Care Act (Private Health Insurance)

The most affordable option is getting insurance under a working spouse. According to the 2018 Kaiser Family Foundation employer health benefits survey, on average, companies pay nearly 83% of the insurance premiums.

If that is not an option for you, then you could encounter high health insurance costs. Be sure to do your research to get the best deal.

You can find insurance via or Below are a few plans that include dental, vision, and prescription drug insurance for one individual.


When we compare the numbers, health insurance is more affordable in retirement when your age is 65+ because the government subsidizes a part of the cost.

Generally speaking health insurance is crazy expensive in the United States and by far, the most affordable option is having your company pay for you.

When you are trying to figure out how much you need for retirement, be sure to include health insurance.

I know I am simplifying a complex system, I hope this knowledge will help you on your journey to understanding health insurance in the United States.

If you would like to request a specific topic you want to learn more about, please let me know in the comments section below or email me at!

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DISCLAIMER: This blog references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. This blog makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. Please do your own comprehensive research before investing in anything.


Alan Chen

Hi! One day, I will build a technology company that will change the world. Right now my focus is teaching personal finance. Now that you know a little about me, feel free to reach out and chat!

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