Health care is becoming one of the biggest expenses many retirees face.
According to Fidelity’s 2025 Retiree Health Care Cost Estimate, a 65-year-old
retiring today can expect to spend an average of $172,500 on health care
throughout retirement, a 4% increase from the prior year.

At the same time, Medicare costs continue to climb. Medicare Part B premiums
increased sharply in 2026, while some Medicare Advantage plans have reduced
supplemental benefits such as dental, vision, and transportation services.

For retirees living on just Social Security, the result can be difficult choices
between medical care and other essential expenses.

Fortunately, there are several ways to reduce health care costs without
sacrificing needed care, and prepare yourself
financially for future unknowns.

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1. Review your Medicare coverage every year

Many retirees enroll in a Medicare plan and never look at it again.

That can be an expensive mistake. Medicare Advantage plans and Part D
prescription drug plans can change premiums, deductibles, provider networks,
formularies, and covered benefits every year. A plan that was a good fit three
years ago may no longer be your best option today.

Annual Enrollment (also called Open Enrollment) runs from Oct. 15 through Dec. 7
each year. Taking time to compare plans could uncover lower premiums, better
prescription coverage, or access to additional benefits.

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2. Consider whether Medigap makes sense

Original Medicare does not have an annual out-of-pocket maximum.

That means a serious illness or an extended course of treatment can generate
significant costs. A Medigap policy helps cover certain expenses that Original
Medicare leaves behind, including deductibles, copayments, and coinsurance.

While Medigap coverage comes with its own premium, some retirees find that the
predictability and financial protection are worth the additional cost.

3. See if you qualify for a Medicare Savings Program

Many retirees assume assistance programs are only available to people with
extremely low incomes.

In reality, Medicare Savings Programs can help eligible beneficiaries pay Part B
premiums and, in some cases, deductibles, coinsurance, and copayments.
Qualification rules vary by state and are based on income and assets.

For retirees on tight budgets, these programs can free up hundreds or even
thousands of dollars annually.

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4. Take advantage of the new Part D spending cap

Prescription drug costs have historically been one of the most unpredictable
health care expenses in retirement.

Recent Medicare changes created a $2,100 annual out-of-pocket cap for Part D
prescription drug spending. Once you reach that limit, you won’t continue paying
additional out-of-pocket costs for covered medications during the rest of the
year.

Retirees who take expensive medications should understand how the cap works and
track their spending carefully.

5. Don’t overlook the insulin cap

Medicare beneficiaries who use insulin have another significant cost-saving tool
available.

Under current Medicare rules, covered insulin prescriptions are capped at $35
per month. For retirees who previously paid substantially more, this provision
can generate meaningful annual savings while improving access to medications
that are critical for managing diabetes.

If you use insulin, confirm that your prescriptions are covered appropriately
under your plan.

6. Apply for Extra Help if you’re eligible

The Extra Help program, also known as the Low-Income Subsidy, helps qualifying
Medicare beneficiaries pay Part D prescription drug costs.

Depending on eligibility, the program can reduce premiums, deductibles, and
copayments associated with prescription drug coverage. Yet many eligible
retirees never apply because they are unaware that the benefit exists.

Even modest reductions in monthly health care costs can add up significantly over
the course of retirement.

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7. Manage your income to reduce IRMAA surcharges

Higher-income retirees can pay significantly more for Medicare through
Income-Related Monthly Adjustment Amount, or IRMAA, surcharges.

Because IRMAA is based on income, strategic planning may help reduce future
premiums. Some retirees use Roth conversions, qualified charitable
distributions, or other tax-planning strategies to better manage taxable income
over time.

If your income dropped because of retirement, divorce, the death of a spouse, or
another qualifying life event, you may also be able to request an IRMAA
adjustment.

8. Use telehealth and preventive care whenever possible

Not every health care appointment requires an office visit.

Telehealth can save money on transportation, reduce time spent traveling, and
make it easier to address routine medical concerns before they become larger
problems. Many Medicare beneficiaries have access to telehealth services through
their plans.

At the same time, retirees should not neglect preventive care. Medicare covers a
variety of preventive screenings, wellness visits, and other services at no
additional cost. Catching health problems early can help avoid far more
expensive treatment later.

Bottom line

Health care cost management is one of the highest-impact financial decisions
retirees can make. Small adjustments to Medicare coverage, prescription drug
planning, and income management can translate into meaningful savings over time.

If you’re unsure whether you’re enrolled in the right coverage or whether you
qualify for assistance programs, consider contacting your State Health Insurance
Assistance Program (SHIP).

SHIP counselors provide free, unbiased Medicare guidance and can help you
identify opportunities to save money in retirement and maintain the coverage you need.

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