Filed Under:Health Insurance, Individual Health

From cheap to top-dollar: retiree health care costs in 5 states

For those entering retirement, one price tag hangs, like a Damocles Sword, above all others: the cost of health insurance premiums.
For those entering retirement, one price tag hangs, like a Damocles Sword, above all others: the cost of health insurance premiums.

We’ve all grown accustomed cost differences for basic goods and services. Take most products or services — food, apparel, gasoline or chiropractic care — and you’re likely to observe widely varying prices, not only by provider, but also by locale.

For those entering retirement, one price tag hangs, like a Damocles Sword, above all others because of the damage it can wreak with one's nest eggs: the cost of health care insurance premiums. As one might expect, key components of this cost — Medicare Part B, Part D and supplemental insurance premiums — also vary by state.

You may be surprised to learn, however, the magnitude of the difference: 30 percent overall. And accounting most for this cost differential, is Medicare supplemental insurance accounts.

So reports HealthView Services, which recently unveiled a new app that lets users compare health care costs by state. Dubbed "HealthView Explorer," the app is tailored to financial advisors and uses HealthView Services’ advisor- 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. The app shows first year costs associated with this coverage, plus projections over a 20-year retirement.

Which states are comparatively expensive and cheap in the health care market? If you live in Michigan, Florida, Nevada and Maryland then you can expect to pay top-dollar for Medicare Part B, Part D and supplemental insurance premiums. At other end of the spectrum: Hawaii, Vermont and Maine.

The app shows that supplemental insurance (which are set at the state level) is 72 percent more expensive for 65-year-olds in Maryland than for their counterparts Hawaii. Medicare Part D premiums, a smaller component of total costs, vary across states by as much as 74 percent. Federally mandated Medicare Part B does not change by state. 

“Many retirees face important decisions about where they want to enjoy their retirement years,” says HealthView Services Founder and CEO Ron Mastrogiovanni. “This tool helps individuals measure the potential impact on health care costs of relocating in retirement.”

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

The tables beginning on the next page show first-year and lifetime retiree health care costs in 5 states: Michigan, Hawaii, Florida, Maine and New York. If we’ve piqued your interest, then read on!

The HealthView Explore app shows 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.

The total for Michigan is nearly $40,000 more than for a retiree in Hawaii, who will pay lifetime projected costs of $112,528 and a first-year cost of $2,818. Again, supplemental insurance premiums to age 84 accounts for most of the cost difference: $77,959 in Michigan vs. $47,890 in Hawaii.

Let’s turn now to two other states at opposite ends of the cost poles: Florida and Maine. For the Sunshine State, the HealthView app pegs first-year health premium costs for a 65-year old at -year old at $3,710. Lifetime costs (again to age 84) total at $152,184.

In comparison, the first-year health costs for a new 65-year-old retiree in Maine is $5,658 — nearly 53 percent more than in Florida. Lifetime health premium costs to age 84 will total $238,307. That’s 57 percent more compared to aggregate health insurance premiums in Florida.

And what of New York, which for many people is the first state that comes to mind in connection with expensive living? Well, it turns out that costs in the Empire State aren’t quite so bad.

A 65-year-old entering retirement this year can expect to pay $3,502 in first-year-costs. The lifetime total to age 84 is $142,889 or $95,418 less than the lifetime total for Maine.

So if you’re trying to help a client decide whether or not to retire in the Empire State, perhaps some other cost of living — like sky-high housing costs in New York City — should be the deciding cost. Agreed?

 

 

See also:

How to personalize health care costs in retirement

Health care costs [Infographic]

The scary facts about health care costs in retirement

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Nichole Morford

Nichole Morford
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