Projected Savings Medicare Beneficiaries Need for Health Expenses Continued to Rise in 2024

Some Couples Could Need as Much as $428,000 in Savings

The percentage of private-sector establishments offering health benefits has been falling. As access to retiree health benefits becomes increasingly rare, the responsibility for health care expenses in retirement will fall more on the shoulders of today’s workers. To project how much Medicare beneficiaries may need to save to have a reasonable chance of meeting their health care spending requirements in retirement, the Employee Benefit Research Institute (EBRI) built a simulation model allowing for uncertainty due to mortality and rates of return on assets in retirement. EBRI’s model reflects recent legislative changes to Medicare Part D enacted by the Inflation Reduction Act of 2022, which caps out-of-pocket spending on prescription drugs at $2,000 in 2025 and tests varying assumptions about Medicare Advantage and Medigap plans that Medicare beneficiaries may purchase.

EBRI’s analysis finds:

The predicted savings target for Medicare beneficiaries to cover premiums, deductibles, and prescription drugs in retirement increased slightly relative to last year for Medicare beneficiaries who enroll in Medigap Plan G, and is sensitive to assumptions about premiums, prescription drug expenses, and usage of health care services.
A 65-year-old man enrolled in a Medigap plan with average premiums will need to have saved $109,000 to have a 50 percent chance of having enough to cover premiums and median prescription drug expenditures, and a 65-year-old woman will need to have saved $133,000.
To have a 90 percent chance of meeting their health care spending needs in retirement, a man will need to have saved $191,000, and a woman will need to have saved $226,000. Couples enrolled in a Medigap plan with average premiums, meanwhile, will need to have saved $243,000 to have a 50 percent chance of covering their medical expenditures in retirement and $366,000 to have a 90 percent chance.
Representing an extreme case, a couple with particularly high prescription drug expenditures will need to have saved $428,000 to have a 90 percent chance of having enough money to cover their health care costs in retirement.
Although there is significant individual-level variation, enrollees in Medicare Advantage plans generally have lower savings targets than they did in 2023 due to lower projections of health care cost inflation. A man enrolled in Medicare Advantage who has median drug expenditures and an average usage of health care services will need to have saved $57,000 to have a 50 percent chance of meeting his health care spending requirements in retirement, and he would need $98,000 to have a 90 percent chance. Meanwhile, a woman will need to have saved $69,000 to have a 50 percent chance and $116,000 to have a 90 percent chance of having enough to cover her health care costs in retirement. Couples will need to have saved $125,000 to have a 50 percent chance and $188,000 to have a 90 percent chance of covering their health care expenditures in retirement. Of course, there are other factors to consider when it comes to choosing a Medicare Advantage plan over traditional Medicare. Medicare Advantage plans often have limited networks or may require approval before certain medications or services are covered.

Figure 9 Figure 11 Savings Needed for Medigap Premiums, Medicare Part B Premiums and Figure 6 Savings Needed for Medicare Part B Premiums, Medicare Part D Figure Figure 2 4 Deductibles, Medicare Part D Premiums, and Out-of-Pocket Drug Percentage of State Government Employers 11 Premiums, and Out-of-Pocket Expenses for Retirement Among Medicare d I Fi S d Fi A tur ow g na avings s is ur ing s lly n fr aum els , 10 ro om w eha tim hil , pt irSa v e only p e Tar ing m ions or v ot e ings N tnt he a e 1 ge nt noug .1 r A p E t t o Ie e B r n mos s e rh to c RI not o c dt e und H e o nt st d e udie t t tC for ov o ha co a H e tses, s c ver Me r a t e v he he onsi e d alt ric t a sa his H he a 90 d h Expe r ve e e a ings ta r - ralt lt e P e h ca e su e lixpe g rc h I lt ible e s in p r rnt ns e gns e ns r c e C te ost s p s a ha tre ir ur es in r s e nc sent ss re e a oc se i s in 199 en Retir nc of nt ia e vt t a ee ir e H lue d d e a P m in t v w 7 (F s of ing r e itnt e his e h long m igur . E m fun noug C piu oup e a d ep nt s ne -m e 3 th M e le r ) r . s s w m m e Fu one d a and c y e rill a t d he not ry ne e a r for ta m e Out b a n dor g e d H t e o r e a e e 65 , ny - a ha pa of lt r b h C e v t spe out ha sent e - P a sa tnding ro 3 p a e a vrcke t e e E iv d e xpe sm e r$ for c for 12 e ta ns nt lle C he 5 e a ,000 of o rs in ll Me a ts lt ha ph ca tr s iv t n th d o a ic in ha r ta e ee r- v e e Jake Spiegel is Health and Wealth Research Associate II at the Employee Benefit Research Institute (EBRI). Paul Projected Savings Medicare Beneficiaries Need for Health Sou Pe rce rcentage of Paym of en Pr t iv fo ate r In -Secto curred r Estab Health lish Care Exp ments W en ith ses, Expenses for Retirement at Age 65 in 2024 Offering Health Insurance to Retirees, 1997 –2023 Advantage Enrollees at Age 65 in 2024 ser sect b a R g ee ne gvrt or ic e fic ir e g e s not a e ia st ta m r eRe a ie 50 v b s. L e a lis tt ir lue nt rp a hm ee ong d m s in t r it c A e e iona en nt -m nt tte s offe his in 201 ro c lly m ha ng -p c c nc a o a re p v r1 e M e d e e – r r a c 2 he . e e nd ost 02 d dica a b 4 for lt s, for $y h b 18 Me 8 r e ,000 a e ne d ins ic CA fit a oup t a rdva s t te nc o , le o ha e su , Me W nt v c ch a e a itd n b h D age a ic s d a 90 e r re ug e c- p nt onsi P e eligib E a rlan c xpe l c e dnt a e le r ns r e E a c r, b e ha e nr t le s a the ir nc ,e o ta se e e ll nd ts in 202 he of e exp E e c 90 B s ov e R tns I h P e’1, d r s p eing s a errow oje crte e he nt n fr c not ir tile ion mod he om inc Thr a lt 1 lude oug h ca 0 e pl d d h 2024 er re in t c oe e ent s not xp his e in 199 a ndit st nd ud consi ur ay 7. t e t s in d he er Fronstin is Director of Health Benefits Research at EBRI. Any views expressed in this report are those of the For the purposes of this study, the health expenses for which savings would be accumulated are (i) premiums for Noninstitu 1,000 tionalized or More Popu Emplo latio yees n of O Medicare ffering Health Beneficiaries, Expenses Continued to Rise in 2024 Early Retirees Medicare-Eligible Retirees 3 4 5 c (Va ostnD s te ha rhe rte Ma a ti,ir r e xim 20 e m not 19 e um nt ) c . . ov St Of cour e arre ting d bse, y in 202 Me the dic r5e a ................................ ra er,e su otche h a r s v facis tor ion o s to r c donsi ................................ enta dl se er w rvhe ice n it s; in th come ese s t ................................ o cacses, hoosi the ng sa a v Me ings ta dica..................... rreg A etds p vant rea se gnt e e 13 d Fi Me gd ur ic ae ut a 1 rhor e 1 P cs a a ont rts B nd ains sh a tould nd he D sa ,not v in (ii) g b s e e the ast sc P im ra ibe ratt d e B s for td o ed the uc a tp offic ible erson w , e(riii s, t ) ho p rus retm tur eium ene s, or ds for a g ot e he Me 65 r d sponsor in 202 igap P4 la s of a n G nd ,Ew B a ho RI nd ,e E (nr iv molls )p out loy in a e -of e - B M peoc e ne dk ic fit ea t rRe spe e sea nding rch Insurance Ages 65 and to Retirees, Older1997 , 2022 –2023 Medigap Premium These observations were used to determine targets for adequate savings to cover an individual’s health costs 50 March S6 o, m 20 e2 C 5o •uple No.s 62 Co 9uld Need as Much as $428,000 in Savings here may p la unde n ov re er st tim raa dtit eiona how l M m euc dic h r are et. irMe eed s ne icareed Atd o vsa ant ve a. gC e onv plae ns rsely, if w often haor vek e lim rs r ite ed ce ne iving twor he ks or alth b meane y rfit eq s t uir hr eoug app h th rove air l Institute-Education and Research Fund (EBRI-ERF), or their staffs. Neither EBRI nor EBRI-ERF lobbies or takes A 7 for dv out antp aa gteie p nt la n inst prescr eipti ad on of d th re ugs. trad W ite iona alsl M o ee xa dic ma E ine r arly e p Re out rog tir-ee of ra s- m p. oc Ak s m eMe t spe e din ca trione nding e Eligd ib la es for bov out e, pbaetc ie ant us e p r73 esc p ripti ercon entd of rugs Mea dn icda re A 2024 100%report found that 11 percent of Medicare enrolleeU s s de id o no f H t e ha alv th e a C a sup re p S le eme rvinta cesl source of coverage. See Fi gur60 e % 11, Savings Needed for Medicare Part BLow Premiums, MedicarA ev P ea ra rt g e D Premiums, and HOut igh -of-Pocket Expenses for Tricare, 1% p ercent, 75 percent, and 90 percent of the time. Estimates are also jointly presented for a stylized opposite-sex couple, 92% employerb e choose fore ce tro taw in m orke p da ic st a ta ions ge 6or 5 a ser nd vic post es a pone re c ov enr ero ellm d. ent in Medicare, they will need to have saved less than the A mdevdap ic nt osit aa l se gions er e vic nr on eolle s a spe C e m h s c ong a cif n hoose c ic e Me p oolic fd H p ic a y la a v p rns in e rg op e w nosa it rolle h no lse . s in Me E pB re RI m ium inv dic it, a ew r s c ee Figure A om ad ss vm a um nt ent e a8 g ton e ha pttla his the ns r . re eThi sea ars a e r cno h. na ly prsi es d mium oes not s for Me facd tor ica in t re A he dv ta ot nt aa l ge Figure 3 https://www.kff.org/medicare/issue-brief/a- Me sna dicp ais dho , 4% t-of-sourceO sthe -of r- , c 1% overage-among-medicare-beneficiaries/. Retirement Among Medicare Advantage Enrollees at Age 65 in 2024 ......................................................... 15 Low Average High By Jake Spiegel and Paul Fronstin, Ph.D., E 88% mployee Benefit Research Institute both of whom are assum 87%ed to retire simultaneously at age 65. 52% 6 90% Enough Savings Median Prescription Drug Expenses Throughout Retirement sa vings targets presented in this paper. 85% Percentage of Medicare Enrollees in Medicare e sa nr volle ings ne es in o ede ur d t m o od cov el. e Percent rMe long dic-atreeag r m Ad -e cva a of rnt e a Priv eg xpe e is at ns st e eill s a -Secto rnd equi ot re he r dEstab rt o he paalt yh e lish the xpe m Me ns en de icts s not ar eO P ff c aov ering rt e Br e pd r e Healt b m yium Me, d h so t icarha e, t nor is in d co lude es it d tin ake Chance of Havin Vg ete rans Affairs, 3% 8 81% Medicare Part A cM ov ee nrs inpatient services, skilled nursing facility care, certain nursing home care, hospice care, and home 80% Su 7 50 0% % ggested Citation: Spiegel, Jake, and Paul Fronstin, “Projected Savings Medicare Beneficiaries Need for Health 88% Advantage Plans, 2007 –2034 79% 79% our into m ac od coun el. t W the hen it fa Ec n tc o om tuha gh e t s t S m ao a v ny ie nst g indiv simatidua ing Insu out ls M e r- d erance of t ia ir- n e p P oc bre e kfo s e to c trr e sp i p Retirees, b te ie o nding c nom Dring u, gw E e e 1997 x ligib p ee xa nle s m e – ine for s 2023 T h Me trhr ou d eg ic eh a to y ru e pt.e R s of etirMe eme dn ic tare Advantage 77% 77% 76% 77% The da 80 t% a for this 45% study came from a variety of sources. Data on Part B and D premiums, Part B and D deductibles, 50% 44% $79,000 $109,000 $145,000 Projec Fi hena alth lly, se fut rvur iceet s .e le gd is laSa tive cv hain nge g s w s M ill ime pad ct ica the sar ve ings Be necen sse arfi y tc o m iar eet ies health ca Ne re ce ost d s in r fo er tir Hea ement. The lth 83% 64% 74% Expenses Cont Minu ened to Rise in 2024,” EBRI Issue Brief, no. 629 (Em73% ployee Benefit Research Institute, March 6, 43% 63% 63% 72% enrollees: those with low use of health care services, those with average use, and those with high use, throughout 80% 42% 12 41% 75% 114,000 158,000 209,000 62% Introduction initial benefit limits, and catastrophic thresholds came from the 2024 Medicare trustees report. Medigap Plan G Early Retirees Medicare Eligibles 61% 61% 61% 40% 40% 40% 69% Inflation Reduction A 50% ct of 2022’s provision o$ n M 35,e 00 d0 icare Part D spe$ n5d 7ing ,000 indicated legisla$ tor 78s’ ,00 a0 ppetite for reforming The 9 20 study a 25). ssumes that all individuals and couples either have Medigap Plan G to supplement traditional Medicare or Ex pen 44%ses Continued to Rise in 2024 75% 59% r eSte ire e m http 70e % nt s: . /P /w re w m wium .kff 90% s for .org/ m Pe ad rtic D are p/la isns sue a-nd brieout f1 /me 3- 8of ,d 0-ic 0p 0 a oc rek -e ad t v sa pnta ending ge-in 1 -on 9 2024 1,out 00- 0p pre atmiums ient pr-e osc utr -of ipti 2-5p on 4o ,0 ck 0 de 0 rtugs -limit as re -s up mod pleeme lednta the l- 38% 38% 58% 65% 40% 37% 60% premiums were gene 75% rated for new Medicare e 50 nr ,0oll 00ees aged 65 in 202 81,4 00 . 0 Out-of-pocket spe 11nding 2,000 on outpatient When the Medicare program was established nearly 60 years ago, it was not 57% designed to cover health care expenses in 42% 71% Medicare. Other recent legislative proposals, such as low 36% ering the 71% Medicare eligibility age and expanding Medicare 41% 70% 62% enroll in 12% a Medicare Advantag41% e plan. We do not provide estimates spe 35% cific to enrollees with supplemental coverage Women 40% 69% 61% 69% 69% 34% benefits-and-prior-authorization/. 34% 34% 60% same way they are modeled for traditional Medicare enrollees. 90% 61,000 98 67% ,00054% 136,000 Som Co e p y C ro iguple ht In Private form s Ins Co uranc auld tio e, n 17% :Ne This e d as repor tM is uc coph as yright e$ d4 b28 y the ,00 Em 0 p loy in eS e avings Benefit Re search Institute (EBRI). You may prescription drugs was derived from the 2022 MEPS, the most recent year of data av 66% ailable. full. Today, the program continues to impose cost sharing on beneficiaries w 32% hen the 32% y use health care services. The 38% 65% 60% 50% 96,000 133,000 176,000 benefits to include dental, 37% vision, and hearing expenses, may again impact retire 31% es’ savings targets. from Veterans Affairs, Tricare, or Medicaid. Similarly, we do not provide 63% estimates specific to enrollees without 55% any form 36% 51% Women 62% 35% 10 copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain This is a technique75% used to estimate the likely 1 3ra 2,ng 00e 0 of outcomes fro 1m 83a ,0 0 co 0mplex process b 2y 4 2 s,imula 000 ting the process under program includes deductibles for inpatient and outpatient services. In addition, when outpatient prescription drugs were 7 30% 33% 27% 27% of suppleM med ent ian al c Drug ov50% era E gex .p A en ms ong es: indiv As sh idua own in ls 4 3w ,0it Fi 0h M 0 gure ed 1 iga 1, pin 202 Plan G 48% 46 a c 9 ov ,m 00e a 0rn w ageould in r e ne tireed m $ e57 nt 94, ,000 ,0 our 00 in sa mode vings a l treatnd s the a se woman 50% 32% 32% 32% By Jake Spiegel and Paul Fronstin, Ph.D., Employee Benefit Research Institute 10 50 % % 31% 31% 25% 90% 163,000 226,000 300,00054% any and all copyright and other applicable notices contain46% ed therein, and you may cite or quote small portions of randomly selected conditions a large number of times. 54% added as an optional benefit in 2003, the program included a 30% then-controversial coverage gap known as the “donut 24% 75% 58,000 94,000 130,000 23% Medicare, 62% 23% w indiv ould idua nels ed a $ nd 69c,000 ouple if e s a as ha ch ha ving d at he goa P l o lan G f ha v ping remaium 50 a ps a ercn e entxpe cha ns nc ee . Thi of ha s avp ing proe anoug ch tah mone kes awa yy sa mvost 51% ed of to tche ov er health Couple 28% 49% Savings Targets to Cover Health Insurance Premiums 27% and Out-of-Pocket Cost 21% s in the report provided that you do so verbatim and with p 42% roper citation. Any use beyond the scope of the foregoing References 90% 71,000 116,000 26% 160,000 hole,” in which beneficiaries must pay out of pocket to cover the cost of prescription drugs. The Patient Protection and 11 25% 46% unc expe No er ns mina t 40 aeint % s in r l yr arte eela s tir to e ef d m re t 50% eo turn nta c a tnd w ua e l use rte he ay s s w of ume espe red a c to v ifi e fo c ra ll he g 1 oe 7 w a 5us lt ,a 0 h ca 0 e log 0 rs of -rno e ser rma hea vlt l icd h ca eis s ove trib re 2 ution 4 se r3 one ,r0v 0ic w 0’e s lif ith s. I a e f e tme im ite a he n . Tha r o f ins 1. t3 t078 is e 2a 1 , ,d ins 0a 0 w nd 0 ta e nt a ad e s d ta of nd at r90 a yring d p d ee tro c ve ia p nt tio re d n ic otf 39% 20% 43% Retirement A Cm oupo leng Traditional Me dicare Enrollee s requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org. 40% Affordable Care Act of 2010 (ACA) included provisions to reduce the size of this coverage gap but did not eliminate it. 75% 222,000 37% 307,000 407,000 Fronst8% in, Paul, and Jack VanDerhei, “Projected Savings Medicare Beneficiaries Need for Health Expenses Spike in 2021: 0.101. This provided a median nominal annual return of 7.32 percent. 20% c wha henc n a e of Meha dic va ing re b enoug enefic h sa iaryv ings, may us $9 e8 he ,000 alt h ca w Aould T re b ser eA v ne ic e ed s a G ednd L for tA hus a m N inc an C ur and E he$ a 116 lth e ,000 xpen w ses, ould w b hic e20% h is hig neededhly for d a e p w eom nde ant n. 20% 50% 78,000 125,000 172,000 35% Out-of-Pocket, 12% Figure3 0 9 %contains the 90% savings estimates for a2 p 64 e,r0 son w 00 ho turns age 3 665 6,0 in 202 00 4 and who 4 p8ur 5,c 0ha 00ses both Medigap Plan G Coinsurance was reduced to 25 percent after a beneficiary reached their deductible, which was $545 in 2024 (Figure 1). Some Couples Could Need as Much a 33% s $360,000 in Sa 8 vings,” EBRI Issue Brief, no. 549 (Employee Benefit Report Availability: This report is available on the internet at www.ebri.org 75% 98,000 158,000 218,000 on whether the individual has reached t32% heir Medicare Part A deductible, this study assumes that be 16% neficiaries with 12 31% 15% See Table V.E2 in Ch http ancse: /o /w f H wa w v.ic nm g s .gov/oact/tr/2024. 14% to supplement Medicare and Medicare Part D outpatient prescription drug benefits. As discussed above, there will be 14% The passage of the Inflation Reduction Act of 2022, however, addressed this coverage gap by initiating a two-year A coup 10le % both with me 90% dian drug expenses would 116,0 ne 00ed $125,000 to 18 ha 8,v 0e 0 0a 50 percent cha 25nc 9,0 e0 of 0 having enough money Research Institute, Janua 29% ry 2022). Medigap have the most comprehensive health insurance coverage available that is supplemental to Medicare (i.e., Plan 30 2% 0% Enough Savings Maximum Prescription Drug Expenses Throughout Retirement 6% 27% Table of Contents The percentage of private-sector establishments offering health benefits has been falling. As access to retiree health uncertainty related C h to ana c e num 26% of H ba ev ri n of g v ariables, such as health care costs, longevity, and interest rates. Among people transition toward an out-of-pocket spending cap for beneficiaries. Starting in 2025, Medicare Part D out-of-pocket t o cover health expens 25% es in retirement. They would need $158,000 to have a 75 percent chance of covering their G) and thus pay pM reem niums for this coverage on a regular basis, whether or not they use health care services. To 24% Enough Savings Maximum Prescription Drug Expenses Throughout Retirement Sp b we itne ie h M gfit ee l, s b dJic a ea k ce rom e , a Pe nd as inc rt P D a, rul F e ta he si rrngly r onst e is a in, “ a lsro eP ,unc rtoje hee crrtte e asponsibilit d int Sa y v re ings M late yd for e to d ic he he ar a ae lt lt h ca h st Bene a re tfic us eia xp a rind e es N ns out ee s in r e pd a tfor ie ent t ir H ep e m r ae e ltsc nt h Expe r ipti willon fa nsll m d ers ug Re orus em on e a.ine the d High in 22% spe Intrnding oduct ion is c ................................ apped at $2,000, inclus ................................ ive of a $590 deduct................................ ible. .......................................................... 5 expens 10e % s and $188,000 50% to have a 90 percent $1 0 c1 ha ,0nc 00e of covering t $he 13ir 1, 0 e0 xp 0enses. $167,000 address uncertainty related to out-of-pocket expenses incurred under Medicare Part B, we assume that all Medicare 0% Men 19% shoulders of today’s workers. To project how much Medicare beneficiaries may need to save to have a reasonable 2022: Some 75% Couples Could Need as Muc 142,0h a 00 s $383,000 in 1 Sa 86 v,ings,” 000 EBRI Issue B 2r 3ie 7,f0 , 0n 0o. 580 (Employee 20 4% % 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 50% $57,000 $79,000 $100,000 Tr bee ne nds ficia in Em ries r peloy acm h th ent e- B Pa arsed t B Re ded tir uc ee tible He, aw lth P hich w rograas $ ms2 ................................ 40 in 2024. The study a ................................ lso assumes that Me ............................. dicare beneficiaries 6 P roject0% ions of savings needed to cover out-of-pocket expenses for prescription drugs are highly dependent on the 90% 170,000 224,000 286,000 chance of B Me m a ne x eimum e fit ting Resea the Dru r irc h I he g E a ns lx tt h ca p iten ute rse , es Fe spe : bIrnding n 202 uary 20 4 r, e2 q a3 uir m ).e a m n w ent ould s in r ne ee tir de $7 me 9nt ,000 , the in sa Emv pings a loyee nd Bene a w fit om Re ase n w arould ch Ins ne tit eut d e 75% 79,000 109,000 140,000 19 So 97 urc 19 e9 : 8 EBRI e 1999s2 ti0 m 0a 0te 2s0 fro 01m 2 0 v0 a2 rio2 u0 s0ta 3 b 2l0 e0 s4 at 2h 0tt 0p 5s2 :/0 /d 0a 6ta2 to 0o 0l7 s.a 20 h0 rq 8.g2 o0 v0 /m 9 e 2p 0s 1-0 ic.2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 with Medigap Plan G have Medicare Part D to cover outpatient prescription drug expenses. Women assumptions used for drug utilization. There are two sets of results in Figure 9: In the first, prescription drug use is at Assumptions Around Health Expenses in Retirement ...............................................................................................10 ( $9 EB 4,00 RI) 0 if e built a ac h ha simula d a tion mo goal od f ha el avllow ing ing a 50 fo p r eunc rcee nt rt a cha intnc y d eue of tha o m ving orta elit noug y and h mone rates of y sarv ee tur d t n o o cn a ove ss r e he ts in r alth ca etir re em ent. 90% 93,000 130,000 168,000 Figure 1 50% 122,000 158,000 202,000 th Source: EBRI estimates from the 2022 Medical Expenditure Panel Survey. 2% 10% Sp t heie m ge elSo d , ia J ua rc n th k e:e EBRI e , ra oug nd sW ti hout m Po aa te m ul F se fro n re m rt onst vir ae riom uin, “ se tant ble; P sr in t aoje t htthe pcst:/e /d second d a taSa toov lsings M .a hset, p rq.gov/m erd ee pic s sc -a icr r .ipti e Bon ene dfic rug ia rus ies N e ise e ad t tfor he 90 Hea ltph Expe er centns ilee unt s Inc il 202 reased 5, w A he ga n in E expe BRIns ’s m es in r odel erteirflect eme s nt re . cIe f nt the le yg ins islatteiv ae d c w ha ant nge eds t a o 90 Me pe dric ca ernt e P cha artnc De e of naha ctevd ing bye tnoug he Infl h sa ation Re vings, d$1 uc30 tion A ,000 w ct of ould 20 22 be, Modeling Technique and Data ...............................................................................................................................11 While premiums for 75% Medigap Plan G Med and icare Med 1ic 6Part 3 a,r0 e0 P 0aD Co rt D ast re t Sharin reate 2d 14 a g, ,0 s he 0 0 2024 alth ca –2025 re expe2ns 74e ,0 s in r 00 etirement for the 50% 68,000 94,000 120,000 the $2,000 in 202 out- 3: So of-poc mk ee C t oup spele nding s Co ul ca dp N te ae kd e s e as Muc ffect. h a Ses $41 parat3,00 e est0im in Sa ates a vings,” re sh ow EBn for RI Iss lue ow , Ba rie ve f rno. age,59 a9 (E nd high mplo Me yed e igap which caps out-of-p90% ocket spending on prescr1ipti 99,on 000drugs at $2,000 2 6 in 202 2,0005 and tests var3y 3ing 6,00 a0ssumptions about needed for a man and $151,000 would be needed for a woman. p urposes of our model, the model also includes estimates on out-of-pocket spending for the Part B deductible (not 75% 89,000 2024 2025 125,000 161,000 C onclusion ...........................................................................................................................................................15 premiumB s.e nefit Re Csea oupr le ch Institute, January 2024 ). Medicare Advantage and Medigap plans that Medicare beneficiaries may purchase. 0% 90% 107,000 151,000 196,000 c overe 0% d by Medigap Plan G) and prescription drugs. Data from the Medical Expenditure Panel Survey (MEPS) were used 1997 1998 199 50% 9 2000 2001 2002 2003 2004 20052 22 00 1 6,0 20 000 7 2008 2009 2010 2012 19 20 01 ,0 20 20 013 2014 2015 2016 20 3 16 782,0 0 10 80 2019 2020 2021 2022 2023 A couple with maximum drug expenses would need $170,000 to have a 50 percent chance of having enough money to Refere$4 nc ,00 e 20 s 0 07 ................................ 2009 2011 20................................ 13 2015 2017 20 ................................ 19 2021 2023 20 ................................ 25 2027 2029 ........................... 2031 2033 50% 16 In the future, despit Coe up tlhe e introduction of the cap on Part D out-of-poc ket spending, individua ls may have to pay greater for this part of the model. While it is currently possible for new Medicare beneficiaries to purchase Medigap insurance 75% 278,000 363,000 463,000 Figure 5 Se Vap nD are arthe e e i,st Ja im ck a, te“s a Meraesu prring ese nt Re etd ir e for me m nte n a Incnd ome w om Ade eq n. ua Bce yc: aC us alc e ula wom ting en ha Reav lis e tlong ic Inc ero m life e e Re xpe pla cc ta enc me ie nt s t Ra hatn me es,” E n, BRI c Eov BRI er’s a hena altly h ca sis fin re e dxpe s: nses in retirement. They would need $214,000 to have a 75 percent chance of covering their Source: EBRI e 50% stimates from various tables at https1 :/2 /d2 a, ta 0 to 0o0 ls.ahrq.gov/meps-ic. 170,000 218,000 shares of their overall health costs in retirement because of the financial condition of the Medicare program and Endnotes ................................ 90% ................................ 327,000 ................................ 428,000 ................................ 548,000 .............................16 (e.g., Plan G) to completely avoid deductibles and other cost sharing associated with Medicare Parts A and B, it is not Percentage of PrFigure ivate-Sector 7 Workers $3,500 women w Iss ill ue ge ne Brie raf, lly 75% no. ne e 29 d 7 (E largm erp sa loy ve ings th e Bene a 1n me fit 54 ,Re 00n to c sea 0 rch I ove ns r the itut alt eh insu , 2Se 14,p 0t0r e0 a m nc be e rp 20 rem 06ium ). s a 27nd 3,0he 00alth care expens 45 e% s in expenses a Sound rce: h$2 ttps50 ://w,000 ww.kff .otrg o /m ha edv ice are a /is s90 ue- bp rie e f/r m cee dnt ica rec-ha advnc antae g eof -in-2c 0ov 24-e enrro ing llmet nhe t-upir da te e-xp ande -kns ey-e tre s. nds / Source: Author simulations based on assumptions described in the text. $3,500 cutbacks to employment-based retiree health programs. For instance, current estimates project the Medicare trust fund possible to avoid the deductibles and other cost sharing associated with Part D outpatient prescription drugs. Thus, Percent 90% age Emp of Lo lo cal yed G by ov 17 8 ern Estab ,000 men lish t Emp men lo ts y 2 ers O 50ff ,0ering 0W 0 ith 5,000 Health –9,999 322,00 W 0 orkers rFigur etire •m e ent The s rep gr ae rd dic letss ed of satv he ings ta savings rgett a for rg eMe ts. A dicls ao, re w be om nee fic n ia wrill ie s t neo ed c ov gre era tp erre sa mium vings th s, dea dn me uctible n e s, a vend n wp he ren scb rot ipti h se on td r tugs he 1 to be insolvent bySource: A 2036, author sim t which p ulations based on assum oint revenues are ptions described in the tex projected to cover 89 t. percent of program costs. The erosion of 40% unde VanDre P rhe arti, D Ja , c for k, “eRe xpteirns em es a entb Off ov Sae ver ings Shor the ing Insu ded He uc trance fa alth tible lls: , E Insur bvto e ide ne Retirees, nc fic anc e ia r Fr ie e om s to a rE eRe B 1997 rRI es tir ’s 201 ponsi – ee 2023 s, b 9 Re le19 fo t97 ir r e 25 m –2023 epnt er c Se ent cur cit oins y Pur roje anc cte ion on expenses The savings e in retst ire im ma etnt es for incr e Me ased dic a sl right e Ad ly v a re nt la atg iv ee e tnr o olle laste y s ew ar it h a for vMe era dg icea r us e e b e of ne he ficaia ltrh ca ies w reho see rv nr ico ell in M s are b ed et iga wepe n 34 Plan G, same goal — for example, of having a 90 percent chance of having enough money to cover health expenses in Figure 1, Medicare Part D Cost Sharing, 2024–2025 ................................ Figure 10 ................................................................. 5 $3,000 employment-ba® sed retiree health programs is discussed in more detail below. 35% between th Mod e e dl, ed”uc EtB ible RI Iass nd uet he Br ie ini f, tia no. l b47 ene 5 ( fitE lim mpit lo . yA end e Bo enc neefit t he Re ini sea tia rcl b h I ens netfit itut lim e, it Ma is r rce h 2019 ached, ).b eneficiaries are in the Early Retirees Medicare Eligibles Early Retirees Medicare-Eligible Retirees p L re a etrrir g ce e em nt r fir e a nt am nd nd .s w 47 ise sensit rpee r m ce uc iv nt h mor e low to a ess e r tlik um ha en th p lyt io tha ns eyn sm a ab re out a for lle p re r e nr one m olle ium s t eo s, p s offe in t rehe rsc r re tip r tir a td ion d eit e iona hera ug l M lth b eexpe d eic ne a ns r fit e e s. A s, prog am nd rong aus m a w p grho e iv of ap te a he - ysect a alt n h ca or av erre a ge Modeling Tech Sav nique ings and Da Needed tto a Have a 90 Percent Chance of Having Enough 35% 100% donut hole until they reach the catastrophic limit, above which there is no longer any cost sharing. When outpatient Figure 2, Source of Payment for Incurred Health Care Expenses, Noninstitutionalized Population of Medicare 93% p est rea m bium lishm ser for ev nt ic Me s w es. d it igh 1,000 ap Plan G or su mor ppele w moernt kearl c s in 202 overag 3e , . 15 Hop w ee rc ve ent r, high offerus ede h rs of ealth cov healte h ca ragree tn o eMe ed d22 ica p re e-re cligi entb low le re etrir sa eevs, ings This study updates p Money revious fo est r im Health ates b y Care E the Emxpen ployeeses Bene in fitRetirement Research Ins tin itut2011 e (EB – RI 2024 ) on the fo r sa a vings needed to Determining how much money an individual or couple will need in retirement to cover health insurance premiums and $2,5029% 0 30% p Cro esc nc ripti lus M on ed ion dian rug Drug covera E gx ep w en as a sed s: d e Ad s sh to ow Men in dicarFi eg in 200 ure 9, 6, b in 202 ene4 fic aia m rie an w s in t ould he d ne onut ed $ hole 109 ,000 paid in sa 100 p ve ings a rcentnd a woman Beneficiaries, Ages 65 and Older, 2022 ..................................................................................................... 6 a if t nd he21 y90 cp % hoo ercse enta offe Med re icda rite tA o deva arnt lya rg ee tir p ela es (F n ovigur er te ra 4 d)it . iona Evel M n ae m dong icar ela . rOf cour ger firm se, s, t the he rp ee a rc re e nt otahe ger offe factr or ing s t r o ec tir onsi ee d he 30 er % a lw th hen 85% 85% cover health insu Co raup nce le prWith emium Drug s and Expen health ca ses re eat xpe th ns e es in r 90th etPercent irement. ile In pTh revrou iousgh rep 2024 an orts (Spied geat l a nd Fronstin, 83% out-of-pocket expenses is a complicated process that depends on numerous variables. The amount of money a person Endnotes 82% 81% w coins ould •ur ne anc A e d e 65 . $- W 1 y33 e he a,000 rn th -old e if e m Aa C an e A c hw nha a rolle s e d a na d gicn a oa ted l of , Me itha d inc ig va lude ing p pa d la 50 n w a p p rit 81% e ov h a rcis eion to p v nt er c aha genc p ha r ee se of mium in a havs w ing red illuc e noug ne tion ed h mone in t to ha hev e dy onut sa savvee d hole d $to 10 tco 9 ov ,000 25 er p he to era clt eh nt The health care costs Medicare beneficiaries face in retirement can be significant 80% . Medicare was not intended to cover b ite cne om fit es t s to o e cit hoosi her e ng arly a Me retir dic ee as or re A d Me vadnt ica ag re e- e pligib lan ov le e re r ttir ra ed eit s ha iona s b l M ee en dic da ercelin . M ing. ed icare Advantage plans often have limited 78% the Maximum Starting 78% in 2025 78% $2,000 78% 25% 25% 2024, and Spiegel and Fronstin, 2023), we made a number of improvements to the prior model (Fronstin and will need will depend on the age at which he or she retires; length of life after retirement; the availability and source of 80% 24% Figure 3, Percentage of Private-Sector Establishments Offering Health Insurance to Retirees, 1997–2023 .................... 7 $2,000 75% 75% 25% have a 50 percent chance of having enough to cover premiums and median prescription drug expenditures, e coins xpens ure as in r nce beyt ir 20 em 20 e. nt A nd and a tp he rov y is faion in ced av the era I gnfl e Me ation Re dig 74% apd p uc retm ion ium Ac s. I t of f e 20 ithe 22r w ins ill tc ea ap d74% Me wad nt iceadr ea P90 ar tp D er out cent -of cha -poc nck ee of t $4 25 50 %,000 all the health care expenses benefic iaries might face, and access to retiree health benefits has been falling. To help networks or may r23% equire approval before certain medications or services are covered, and some Medicare Advantage Change in $428,000 VanDerhei, 2022). First, we modified 23% the model to account for the phasing in of a $2,000 cap on Medicare Part D out- health insu 25% rance coverage to supplement Medicare; health status and out-of-pocket expenses; the rate at which health 22% $413,000 $407,000 22% Methodolo67% gy A ha spe s a vnding ing resu enoug a lt a nd tof $2 ah sa t he ,000 65 -v d yings, e est c alin a r-rold e t$ ing in t 1 91 win 202 he om ,000 a pn w e w r 5. could e ilnt l ne a g b e e e d of ne to e eha m de p vd loy e for se ar va s e d offe m $ a1 n a r33 ing nd ,000 cov $2 . e 26 ra,000 ge, t he would per cbeent ne ag eed e of d w for or k ae w rs a om ta fir n.m s that 76% stakeholders understand w 76% hat retirees will need to cover health costs in retirement, EBRI has developed a 66% projection plans 70 re% quire a premium. However, we also have not modeled the $3 9im 9,0p 00act on savings needed of coverage of extra Figure 4, Percentage of Private-Sector Establis 21% hments With 1,000 or More Employees Offering Health Insurance 65% to 1 21% 20% 64% of-pocket spending. $387,000 Se 20% cond, we changed the source for Medigap premiums and started conducting sensitivity analyses See https://www.cms.gov/files/document/2024-medicare-trustees-report.pdf. Predicting changes to the generosity o 2f 0% care $4 cost 00,00 s inc 0 rease; and interest rates and other rates of return on investments. In addition, p $383,000 ublic policy will also 23% 19% offer c$1 ov ,50 er0age has declined as well. In 2023, 11 percent of workers were employed at establishments that offered 69% $368,000 model for estimating the savings Medicare beneficiar19% ies may need to achieve to have a reasonable chance of meeting benefit 20s %— Re su tirce h a es, 199 s vision, 7–2023 hea r ................................ ing, and 22%dental servic................................ es — in Med68% icare A$363,000 dva ................................ ntage plans. ................................ 8 68% 18% $361,000 $360,000 21% 18% around the level of the premium. Third, a new component of the model estimated savings needed to cover the cost of 21% 18% 57% Medicare benefits is outside the scope of this paper. 18% affec •t 60 spe %To nding hav eon a he 90a p lteh ca rcent re cin r hanc etir e eof me m nt e. etW ing hil$349,000 e the it ir is he poss alth ca ible rte o spe dernding ive a si ne ngle eds in num re bte irre tm ha etnt a, n ind a ma iv n w idua illl ne cae n use d to to E Anr coup ollmle e nt bot in Me h witdh me icared A iad n d vant rug age exp pla ens nse ha s w s b ould ee n g nee row d $in 243 g a,000 nd is t o slight have ly aa b 50 ov p ee trhe ce nt 50 p c 65% ha er nc ceent of thr ha evsh ing old e noug (Figur h mone e 8). y 20% $342,000 64% health coverage to early retirees, down fr20% om 29 percent in 1997 (Figure 5). Similarly, 8 percent of workers were 62% 17% 17% their $he 350a ,0lt 0h ca 0 re spending needs. 62% 19% 61% 15% 61% 61% 16% 61% $326,000 $325,000 health insurance premiums and out-of-pocket 19% spending among Medicare enrollees who choose Medicare Advantage 59% set savings goals, a number based on average expenses will be too small for approximately one-half of the population. The to cov Cong er ha he rev a ss e lt iona h e savxpe e l B d udg ns $191, es in r et 00 Of0, a e fic tir ee nd a m ss e aum nt w . om e They w s t aha n w t ould Me ill ne dic e ne a dr e e td o A $ ha d307 vv ae nt ,00 sa ag v0 t e e d e o n $ha r2 ollm 26 ve,000 e ant 75 . w C p ill oup e rre ce a lent cs e h 60 p cnr haolle nc ee rd c of ein a ntc o in le v M ee rd ing ss iga tha tp he n a pir la n 2 15% 15% employed at establishments that offered health coverage to Medicare-eligible retirees, down from 25 percent in 1997. Fi Be gur ca eus $1 5, P e ,00 s0e amp rcele nt a siz ge e sof foP r rloc ivaatle g -Se ove crnme tor W nt ore kmp ers E loym ers ploy tend ed to by b E est muc ablis h h sm ma ent lles Offe r than rfo ing r pH rie va alt teh I -se ns cto ur r aenc mp e loy to eRe rs,t ir the eere s, is 17% 50% 17% 55% 54% 15% 17% plans over the traditional Medicare program. As a resu 17% lt of these modifications, past estimates are not ne 13% cessarily 16% 13% $300,w 00it 0h average premiums, meanwhile, will need to have saved $243,000 to have a 50 percent chance of covering e dxpe ecad ns ee . s a Wend ma $k 3e 66 seve ,000r atlo aha ssu ve m a p t90 ion p s r erecg eant rd c ing hanc pre e m of ium cov s a e16% rnd ing out the-ir of e -p xp oc ek ns ete spe s. nding among Medicare Advantage 10% mo EBRI re’ s v am ria od tion el inc froor m pyor ea ar te to s y ce ha ar nge in the s d ue loc a to l g the ove Irnme nflatnt ion Re estima duc tets ion A . ct of 2022, which caps Med12% icare Part D out-of- These sta1997 tistics sh –202 ould 3 ................................ not be interpreted a................................ s meaning that 8 perc................................ ent of workers should................................ expect supplemental he .............. alth 8 10 12% $590 15% 47% Thus, this analysis uses a $545 Monte Carlo simulation model that treats health insurance premiums and out-of-poc 11% ket comparable to estimates produced since 2023. However, our updated mode14% l indicates that savings ne 46%eded to cover p lan e40 nr % olle thee irs. Fir medst ic, aw l e expe ass ndit umur e t eha s in t Me retdiric ea m re e nt Ad a vnd ant $ a366 ge e ,000 nrolle to es ha av re e a a ll 90 enr polle er 14% ce dnt in cze harnc o-e p. re mium plans. This p ocket spending at $2,000 starting in 2025. The model also includes sensitivity analyses surround 44% ing updated coverage to Medicare when enrolled in the program, nor should it be implied that 11 13% percent of workers should expect $500 42% 3 $250,000 he Me alt dh ca icare r eP a ert xp B ens coe vs in r ers outp etira etm iee nt ntme as k dicnow al sen va rvicelue s as b s wut ell d aesa p lsre w vit entiv h thee s unc ervic ee rtsa , int lab y te of sts how , x- ra long ys, tahe nd indiv duraidua ble me l od r ic ca oluple health ca 10%M rea c xost imum s in rDru etire gm E ex nt p en con stes inu : e I n 202 to be4 a , a si g m nif an w icant ould bur ne deen. d $ The 131r,000 ema inde in sa rv of ings this a nd Issa ue w B om rieafn w disc ould usses net 5% e rd e nds in a Fiss gur um e p6, P tion i ers b cent ased age on of St the at e fa G ctov tha ertnm 75e nt pe r Ecm ent ploy of eMe rs Offe dicar ring e Ad H ve aa nt lta h I ge ns eur nra olle nce e s to we Re re ti rin a ees, 199 zero-7p– r2023 emium ..................... plan in 9 11% assumptions about Medigap plans, as well as savings targets for people enrolled in Medicare 11% Advantage plans, which to receive health coverage if they retire before age 65. Many of these workers will not be eligible 11% for retiree health 36% 30% equipment. will su • rviv Re e p arnd esent wha ing t ra an tee of xtrre em tur e n th case e, y aw cill oup acle hie w vit eh p on atrhe ticir ula sa rly vings in high prre etsc ire ripti meon nt b dy rug sim eula xpetn ing ditur 10e 0,0 s w 00 ill ob neser ed v to ath ions ave $ the 15 8 a,00 v 9aila 0 if e bilita y cof h ha em dp a loy gm oael nt of -b ha ased ving re at ir 50 ee p h ee rc ae ltnt h b ce ha ne nc fit es, t of he ha v m ing ode el th noug at h mone we use yt o sagveene d r to atc eov the er sa hevaings ta lth carreg ets, 9% 2024. Medicare Advantage enrollees often make a tradeoff between premiums and out-of-pocket spending: Lower $200,000 are an increasingly popular choice among Medicare beneficiaries. coverage for several reasons. They may be part-time workers; they may not have had enough years of service to 8% Figure 7, P $0ercentage of Local Government Employers With 5,000–9,999 Workers Offering Health Insura8% nce to Re 0%tirees, for each source of supplemental coverage. In some of the simulated outcomes, the individual or couple will only survive saved $428,000 to have a 90 percent chance of having enough money to cover their health care costs in c e 4ha xpe nge nse s t s in r o the et ir m eod me ent l, . the If e ait dhe ditrion o inste f M ade w dic ant are ed A a d v 90 ant pa eg rc ee , nt and cha the nc e fin of dings. having enough savings, $224,000 would be 20 5% % 7% p rMe em dium icare p P la ans rt D arceo v us ers ua o lly De utp a du ss actie tioc blnt eiat pe re ds w crip ith hig tion d he rug r out s. M -ax ofi- mp um oc o kut et o f P spe ock nding et , though in som Co e c ina sses, uranceenrollees choose qualify for the benefit; or new hires may not be eligible for coverage. 1997–2023 .............................................................................................................................................. 9 $150,000 a few yea re rs a tiren m de tnt hus . will only have a relatively small aggregate value for health expenses in retirement. In other cases, needed for a man and $262,000 would be needed for a woman. The results from EBRI’s projection model indicate that health care costs incurred by Medicare beneficiaries are high. limited networks in order to drive premiums lower. To derive a range of possible out-of-pocket spending amounts for 5 Medig 10a % p Plan G covers the Medicare Part A deductible, Part B excess charges, Part B coinsurance for preventive care, Part A they may live far longer than the life expectancy for an individual or couple at age 65 and generate a correspondingly Fi Am gur ong e 8, P Med eiga rcep nt e an greolle of eM s, t edhe ica r per oje Enr colle ted esa s in M vings ta edicra gre et s a Adrve a nt sensit age iv Ple a ns to , a20 ss07 um–p20 tion 34s a ................................ bout prescription drug .............. 11 The Medic Aa HrRQ e Ad dv aa ta nt sh agow e e a nr si olle mila es, w r tre en us d e ad m ong the ast va etre a gaend in loc -neatl g wor ov ke m rnm axim ent um em ou ploy t-of e-rp s. A ock m eong t lim it st. aL te ow e m us pe loy rs of ers, a heft alt eh ca r an re $10% 00,000 hospital and coinsurance costs for an extra year after Original Medicare benefits run out, Part B coinsurance and copayments, A coup • le Aw ltit houg h ma h t xim heurm e is d rsi ug gnif expe icant ns e indivi s would dua l- nle ee ve dl va $290 ria,000 tion, te o nha rolle vee a s in Me 50 ped rc iceant re cA ha dv nc ant e a of ge ha pv la ing ns e gnoug enera h mone lly have y to Trends in Employment-Based Retiree Health Programs 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 larger aggregate value. expendit 0%ures and Medigap premiums. Among Medicare Advantage enrollees, the projected savings targets are sensitive inc wer re ea a se ssum in te he d tla o tha e 19 ve90 res, t ache hed p 25 erc p ee nt rc ae gnt e offe of tr he ing out re- tir ofe-e p oc hekaeltth b limeitne . Me fits ha dium s b us ee en rs of falling hea(ltFi h ca gurree 6w ). er The e ass de um clin ed e t in o the Fi thre gur e ep ints 9, Sa of vings N blood fo ee r daepd p ro for v eMe d pd ro iga cep d ure Presm , P ium art s, Me A copdaic ya mre ents Pa rotr B c oPin re sura mium nce s a fond r ho Dse pd icuec tcible are,s, Me coins dura icanc ree P fo arr t a D s killed low 19e 9r 7 1sa 99v 8ings ta 1999 2000 rg 2e 00t1s 2t 0ha 02 n th 2003 2 e0y 0 4d 2id 005in 202 2006 203 07 d 20 ue 08 2t0o 0 9low 2010 er 2 0p 11roje 2012ct 2ions 013 2 0of 14 2he 015a2lt 0h ca 16 201r7e 2c 01 ost 8 20 inf 19 2la 02t0ion 202. 1A 2 0m 22a 2n 023 cover health care expenses in retirement. They would need $363,000 to have a 75 percent chance of covering their One of $50,0 the 00 reasons we focus on how much individuals need to save for health care expenses in retirement is because to assumptio Sons urce : aEBRI e bouts tip mrae tesc s fro ripti m vaon riousdta rug bles c at ost https s:/ , /dtahe tato o elsnr .aholle rq.goe v’ /m s us eps-a ic.ge of health care services, and projections of health p ha Ov er v ec e re a r nt lle, a aa c gs of he e of d 20 50 loc 22 a pl g e , rMe cov ent d eic r nm of are te he nt cov out ee m re -pof d loy -62 peoc rs offe pkeertc e lim nt ring i tof . r At end he tir eh ce ost igh he of a us lte he h b rs of ae ltne h ca he fita s st re lt h ca ser artv e ric e d e w m s for e or re e a Me rss ecd um eic nta e ly rd e . tFor b o eha ne ev fic xa e ia m re rp ie ale cs a he , in 201 g de 7 s5 65 1, nursing facili Pre ty m (ium SNF), s, a and nd e Out me-rg ofe -nc Poc y k ce otv e Dra rug ge E dxpe uring ns fo es for reign Re tratv ire el. m ent at Age 65 in 2024 ......................................... 13 B expe ecaus nse e s a e the nr nd olle ag $g d 4r 28 in M eg,000 ate ed v ic ta o a lue rha e A v of e d v sa aa nt 90 vings for a g pe e rw ce ho nt he ha caha lt s m h e nce e xpe dof ians n d cov es in r re ug ring ee xp ttir he eendit m ir e ent ur xp e e w sns ould ae nd s (F b ae n a igur sp ve e ent r1 a 0 g g). e r a us du aa glly e of ovh ee r atlt im h ca e in re fewer and Sofe urcw e:e Va r rie oum s ta pbloy les e at rhs a ttpsr :/e /d aoffe tatoolsr.a ing hrq .gro e vt /m iree pe s- iche . alth benefits. The Agency for Healthcare Research and Quality care cost inflation. In general, savings targets tend to be lower for Medicare Advantage enrollees relative to Medigap 85 percent of local government employers with 5,000–9,999 workers offered health coverage to early retirees (Figure a pnd erce old nte of r, w the hil lim e out it. -of-pocket spending accounted for 12 percent of incurred costs and private insurance covered 17 $0 retirement ser , v the ice s w proc ille ne ede s a d v to aila ha bvle e a sa t v ae gd e $ 65 57 c ,000 ould t o beha inv vee st a e 50 d unt peril suc cent h ti cham nc ee t ha of tm ee ae cth a ing nnu hisa he l ea xpe lth ca ndit re ur spe e ta nding kes 6 (AHRQ) reported that only 4 percent of private-sector establishments offered health benefits to early retirees in 2023, See VanDerhe20 i (11 2006)20 fo 12 r esti20 ma 13tes o 20 f 14 the 2 imp 20a 15 ct of 20 lon 16g-term 2017 -care 20 exp 18 ense 20 s19 on the 20 20 amoun 20ts 21 need 20 e22 d for s 20 uf 23 ficient 2024 enrollees, but there are tradeoffs for retirees to consider. For example, enrollees generally trade lower premiums for 7 p) e. rc Beynt 2023 (Fig, ur ite w 2a). s d own to 65 percent. place. The req si uir me ula mteion mod nts in ree th tl in irem t th his ent , ana and lyth si he s a w ss ould um ene s readt e$s of 98,000 retur to n w hait vh a e a m 90 e d pia ern no centm cina hanc l va e. lue Me of anw 7.32 hile p , e ar c w eom nt an retirement income at the 50 , 75 , and 90 percentiles. higher out-of-pocket spending, and some Medicare Advantage plans have narrower networks. Source: Author simulations based on assumptions described in the text. will need to have saved $69,000 to have a 50 percent chance and $116,000 to have a 90 percent chance of e e e e e e e e e e e e e e e eb b b b b b b b b b b b b b b br r r r r r r r r r r r r r r ri. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.o o o o o o o o o o o o o o o or r r r r r r r r r r r r r r rg g g g g g g g g g g g g g g g IIIIIIIIIIIIIIIIs s s s s s s s s s s s s s s ss s s s s s s s s s s s s s s su u u u u u u u u u u u u u u ue e e e e e e e e e e e e e e e B B B B B B B B B B B B B B B Br r r r r r r r r r r r r r r rief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief A r• • • • • • • • • • • • • • • • eMar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar searc c c c c c c c c c c c c c c c ch h h h h h h h h h h h h h h h h 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 r,,,,,,,,,,,,,,,,e p 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0r 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 t f r• • • • • • • • • • • • • • • •o N N N N N N N N N N N N N N N N mo o o o o o o o o o o o o o o o t................h 629 629 629 629 629 629 629 629 629 629 629 629 629 629 629 629 e EB RI Education and R esearch Fund © 2025 Employee Benefit Research Institute 17 13 11 14 10 16 15 12 8 9 2 4 5 3 6 7