App Compares Retirement Health Care Costs

Advisers can use the HealthView Explorer app to spark conversations about health care costs in retirement.

The costs of health care in retirement can vary substantially by state, with the most expensive states for key components of retirement health care being Michigan, Florida, Nevada and Maryland. On the other end of the spectrum are Hawaii, Vermont and Maine—the least expensive states for retirement medical care, according to the HealthView Services application (app).

The app compares the total cost of Medicare Part B, Part D and supplemental insurance premiums by state, and finds they vary more than 30% overall. Medicare supplemental insurance is the main driver of the cost differences. For example, the app shows that supplemental insurance, which is set at a state level, is 72% more expensive for a 65-year-old in Maryland than in Hawaii. Medicare Part D premiums, a smaller component of total costs, vary across states by as much as 74%. Federally mandated Medicare Part B is the same for all states.

The new HealthView Explorer app, developed for financial advisers, utilizes HealthView Services adviser- and physician-reviewed methodology to project retirement health care costs. The app draws upon data from 50 million health care cases to project health care costs by age and state for individuals retiring at 65.  

Medicare Part B, Part D, and supplemental insurance premiums protect retirees from the costs associated with health events. The app shows first-year costs associated with this coverage, as well as projections over a 20-year retirement, according to Ron Mastrogiovanni, HealthView Services founder and chief executive. He explains many retirees face important decisions about where they want to enjoy their retirement years, and this tool can help individuals measure the potential impact on health care costs of relocating in retirement.

NEXT: Living in Hawaii could save $40,000 in the cost of retirement over Michigan.

The app reveals that a person retiring this year at age 65 in Michigan will spend $3,707 in their first year of retirement, and will have a lifetime projected cost of $152,175 for Medicare Parts B and D and supplemental insurance premiums, assuming a 20-year retirement. This is nearly $40,000 more than a retiree in Hawaii, who will pay lifetime projected costs of $112,528 and a first-year cost of $2,818.

For a 55-year-old living in Michigan, these costs rise to $6,152 in first-year costs, and $252,915 in lifetime costs. If the same person were to retire in Hawaii, his costs would be $4,713 for the first year and $188,575 lifetime, or a difference of $64,340 in projected lifetime costs. By comparison, a 55-year-old planning to retire in New York at 65 can expect to pay $5,751 in the first year of retirement on Medicare and supplemental insurance premiums, and $234,683 in lifetime costs to age 85. For the same individual retiring in Florida, these costs are $6,104 and $250,536. The costs for an individual in California are projected to be $5,854 and $239,526.  

The Explorer app highlights projected retirement health care costs as a starting point for deeper client conversations. For a growing number of retirees, these discussions will need to include the topic of Medicare means testing surcharges, which are not built into the app.

Retirees who will receive more than $85,000 (individual) or $170,000 (couple) in retirement income will be subject to Medicare surcharges. These additional costs may increase Part B and D premiums above these projections by up to 200%, notes Mastrogiovanni. It is also important to realize that retirees will incur significant out-of-pocket costs not covered by Medicare. 

The impact of these factors are accounted for in HealthView’s more comprehensive health care planning tools, including HealthWealthLink, which can be customized by health condition, gender, current age, planned retirement age, income and state.

“While many of us may be reluctant to move, it is crucial to make informed decisions and understand that retirement health care costs may be reduced by changing your state of residence,” Mastrogiovanni says. Discussions of health care costs, and what can be done to plan for and manage them, helps relationships and encourages clients to increase savings to cover these costs, he notes.  

More information on HealthView Services, a provider of retirement health care planning applications, including Medicare, long-term care and Social Security optimization, is here.