Retiree Healthcare Costs Surge: Milliman Index Shows $418K Savings Needed for Medicare Couples
Event summary
- Milliman's 2026 Retiree Health Cost Index shows a healthy 65-year-old couple retiring this year needs $418,000 in savings under Original Medicare with Medigap Plan G plus Part D coverage, up $30,000 (+7.7%) from 2025.
- Under Medicare Advantage plus Part D (MAPD), the projected cost is $211,000, a $28,000 (+15.3%) increase from 2025.
- The index's largest single-year increase is driven by higher Medigap and Medicare Part B premiums, rising long-term healthcare inflation, and adjustments to Part D.
- Despite the sharp rise, longer-term trends remain moderate with average annual growth of 3% for Medigap and 2% for MAPD between 2022 and 2026.
The big picture
Milliman's index highlights the volatility in retiree healthcare costs, with 2026 marking the largest single-year increase since the index's inception. The data underscores the importance of flexible retirement planning as healthcare expenses continue to rise, influenced by factors like premium adjustments and long-term inflation. The moderate longer-term growth trends suggest that while short-term spikes occur, the overall trajectory remains manageable for now.
What we're watching
- Cost Inflation Trends
- Whether the sharp single-year increase in healthcare costs signals a new trend or is an outlier.
- Medicare Advantage Dynamics
- How adjustments to Part D and rising medical costs will affect Medicare Advantage premiums and benefits.
- Retirement Planning Impact
- The pace at which retirees adjust savings strategies in response to higher projected healthcare expenses.
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