Fidelity Retiree Health Cost Estimate Jumps to Quarter of a Million

March 25, 2010 (PLANSPONSOR.com) - Fidelity Investments' annual Retiree Health Care Costs Estimate indicates a 65-year-old couple retiring this year will need $250,000 to pay for medical expenses throughout retirement, not including nursing home care.

The Fidelity 2010 retiree health care costs estimate is 4.2% higher than last year's estimate of $240,000 (see  Retiree Health Care Estimate Jumps 6.7%) and 56% higher than in 2002, when Fidelity first calculated retiree health care costs at $160,000.       

Fidelity said the significant jump in the retiree health care cost estimate from 2002 to 2010 can be attributed to a number of factors including higher costs (e.g., for doctor's visits, diagnostic tests); increased expenses associated with new technology; and general price inflation.      

According to a press release, the survey assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government's insurance program Medicare. The Fidelity estimate takes into account cost sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare.       

The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services, and long-term care.       

A recent study suggested that adding the cost of nursing home care could possibly double the amount retirees need for health care expenses (see  Nursing Home Care Increases Retiree Health Care Savings Need).