Medicare Costs in Retirement: How Much Should You Budget?

Your Medicare Retirement Budget Checklist

1. Medicare Part B Premium

2026 standard premium:

$202.90 per month per person

Annual cost:

$2,434.80 per person

Married couple:

$4,869.60 per year

before IRMAA.

2. IRMAA

Higher-income retirees can pay substantially more for both:

Part B

and

Part D.

Include IRMAA in your retirement-income planning if your MAGI is near or above an income threshold.

3. Medicare Supplement Premium

If you choose Original Medicare with Medigap, include the monthly premium for:

Plan G

Plan N

or another Medigap plan.

Remember that Medigap premiums can increase over time.

4. Medicare Part D Premium

Part D premiums vary by plan.

Don’t budget based only on premium.

Include your expected prescription costs.

5. Prescription Drugs

In 2026, covered Part D drug out-of-pocket costs are capped at:

$2,100 per year

Once you reach the threshold, you pay $0 for covered Part D drugs for the rest of the calendar year.

6. Dental Costs

Original Medicare generally doesn’t cover routine dental care.

Budget separately for:

• Cleanings
• Crowns
• Bridges
• Dentures
• Implants
• Other dental expenses

unless another insurance plan covers them.

7. Vision and Hearing

Consider:

• Routine eye exams
• Eyeglasses
• Hearing aids
• Hearing-aid maintenance

These can create meaningful retirement expenses.

8. Medicare Advantage Out-of-Pocket Costs

If you choose Medicare Advantage, budget for:

• Doctor copays
• Specialist copays
• Hospital expenses
• Imaging
• Outpatient procedures
• Maximum out-of-pocket exposure

A $0 plan premium doesn’t mean $0 medical expenses.

9. Long-Term Care

Medicare generally doesn’t pay for indefinite custodial long-term care.

This is one of the largest healthcare risks that needs to be considered separately from normal Medicare budgeting.

Simple Retirement Budget Example

Suppose one retiree has:

Part B

$202.90 × 12 = $2,434.80

Medigap

Hypothetical $160/month = $1,920

Part D

Hypothetical $25/month = $300

Dental/Vision/Hearing Reserve

Hypothetical = $1,000

Before prescription copays and miscellaneous healthcare:

$5,654.80 per year

This is only an illustration. Actual costs vary significantly.

Don’t Assume Healthcare Inflation Stops at 65

Medicare premiums, Medigap premiums, drug costs and other healthcare expenses can increase during retirement.

A 65-year-old may be budgeting for Medicare over a 20- or 30-year retirement.

Build inflation into the plan.