Healthcare Costs for Retirees Dip in 2025

By Amanda Umpierrez | Originally posted by 401K Specialist

Retirees enrolled in one Medicare plan could see a substantial decrease in healthcare expenses compared to 2024, finds Milliman

In a surprising turn of events, the amount of healthcare savings needed from retirees could be coming down.

Global consulting and actuarial firm Milliman this week reported that a healthy 65-year-old couple enrolled in Medicare and with supplemental Medigap Plan G Plus Part D coverage will need to save an average of $388,000 for healthcare costs—a $7,000 decrease compared to last year’s estimate of $395,000. This includes prescription drug coverage, hearing, vision, and dental benefits, and out-of-pocket costs.

Retirees who see in-plan service providers with Medicare Advantage Plus Part D coverage would need to save an average of $183,000 for healthcare costs, for a $1,000 increase from 2024.

Men could expect to spend an average of $275,000 in healthcare costs under Original Medicare Plus Medigap Plan G Plus Part D, while those enrolled in the Medicare Advantage Plus Part D Plan (MAPD) will allocate an average of $128,000 to healthcare expenses.

Women are likelier to spend considerably more for both programs—at $313,000 for participants enrolled in the Original Medicare Plus Medigap Plan G Plus Part D program and $148,000 for the Medicare Advantage Plus Part D plan.

While Milliman’s analysis shows that the overall healthcare savings needed for Medigap individuals has risen $17,000 between 2022 to 2025, savings estimates for MAPD enrollees fell $12,000 due to price and utilization changes, projected future inflation, and policy and regulatory changes like the Inflation Reduction Act (IRA), found Milliman. Due to changes in the IRA, the Centers for Medicare & Medicaid Services is piloting a voluntary premium stabilization demonstration test between 2025 to 2027, aimed at reducing premium increases and offering risk protection.

Other factors that influence healthcare savings include lifestyle needs and changes, experts note. When individuals retire, what benefit plans they select, and their living situations are all factors in how much savings they’ll use for healthcare costs.

Milliman’s analysis also took a look at total spend by state, showing that Florida residents enrolled in Original Medicare Plus Medigap Plan G Plus Part D could expect to spend more on healthcare expenses compared to other regions. Retirees in Minnesota, New York, and Connecticut who are enrolled in MAPD are also likelier to spend more.