When couples think about whether they can afford to retire, the conversation often begins with familiar expenses. What will the mortgage or housing costs look like? How much do we want to travel? What will we spend on food, entertainment, and everyday living?

 

Healthcare deserves its own conversation.

 

Unlike many retirement expenses, healthcare costs can change considerably over time, and the planning can look very different depending on when each spouse retires, when each becomes eligible for Medicare, what coverage is available before then, and whether either person eventually needs long-term care.

 

For couples, there is an additional wrinkle: you may retire together, but you do not necessarily reach Medicare eligibility together. One spouse may be 65 while the other is 61. One may continue working and provide employer-sponsored coverage while the other retires. Or both may leave work before Medicare eligibility and need to create a healthcare bridge.

 

That is why we believe healthcare planning should be part of the retirement decision itself—not something couples figure out after they have already decided when to stop working.

 

The First Question: Will You Retire Before or After Medicare Eligibility?

 

For most people, Medicare eligibility begins around age 65. That makes 65 an important dividing line in retirement healthcare planning.

 

If both spouses retire after becoming Medicare-eligible, the conversation generally centers on understanding Medicare, supplemental or Medicare Advantage coverage, prescription drug coverage, premiums, deductibles, copays, and other out-of-pocket expenses.

 

If one or both spouses retire before 65, however, there is another question that has to be answered first: How will we obtain health insurance between retirement and Medicare?

 

Someone who retires before 65 and loses employer-sponsored health insurance may have several potential sources of coverage depending on their circumstances, including coverage through a working spouse's employer, COBRA continuation coverage, retiree healthcare benefits from a former employer, or an individual policy through the Health Insurance Marketplace. Losing job-based coverage can qualify someone for a Marketplace Special Enrollment Period. (HealthCare.gov)

 

For someone considering retirement at 62, for example, those three years before Medicare can represent a meaningful part of the retirement budget.

 

That doesn't necessarily mean early retirement is unaffordable. It means healthcare needs to be priced into the decision before you make it.

 

Couples May Have Two Different Healthcare Timelines

 

This is an area where planning for a couple can become more complicated than simply estimating one healthcare expense.

 

Imagine a 66-year-old employee who wants to retire and has a 61-year-old spouse. The retiring employee may transition to Medicare, while the younger spouse still needs several years of other health coverage.

 

Or perhaps the younger spouse continues working and has access to an employer plan that can cover both people.

 

The important point is that couples shouldn't necessarily treat healthcare as a single household expense. It can be useful to create a timeline for each spouse:

 

When will each person retire? When does each become eligible for Medicare? What insurance will each person have before then? What happens when one spouse transitions to Medicare while the other remains on another plan?

 

That timeline can then become part of the broader retirement income plan.

 

Medicare Doesn't Mean Healthcare Becomes Free

 

Reaching Medicare eligibility can make healthcare planning more predictable, but Medicare is not free healthcare.

 

Most people don't pay a premium for Medicare Part A because they or a spouse paid Medicare taxes long enough while working. Part B, however, generally has a monthly premium. For 2026, the standard Part B premium is $202.90 per person per month, and higher-income beneficiaries can pay more. Medicare also involves deductibles and cost sharing, and Original Medicare does not have an annual out-of-pocket maximum unless someone has supplemental coverage or participates in a plan that provides one. (Medicare)

 

Depending on the approach selected, retirees may also have costs associated with prescription drug coverage, Medicare Advantage or supplemental coverage, and services that Medicare doesn't fully cover.

For a couple, remember that Medicare is individual coverage. Each spouse has their own Medicare enrollment and costs.

 

So rather than putting a generic “healthcare” number into a retirement projection, we prefer thinking about the actual components of the expense.

 

Build Healthcare Into the Retirement Income Gap

 

We recently discussed the idea of a retirement income gap in this series.

 

Your income gap is essentially the difference between the amount of income needed to support your desired lifestyle and the reliable or recurring income available to help fund it.

 

Healthcare belongs in that calculation.

 

If a couple expects to spend $10,000 per month in retirement but hasn't included insurance premiums, Medicare costs, prescriptions, dental expenses, hearing, vision, and other out-of-pocket healthcare costs, the income gap may be understated.

 

This can be particularly important during the pre-Medicare years.

 

A couple might look at their investment accounts, Social Security projections, pensions, and living expenses and conclude that retiring at 62 appears achievable. Once the cost of obtaining healthcare coverage for the next three years is incorporated, however, the picture may look different.

 

That doesn't automatically change the retirement decision.

 

It simply makes the decision more informed.

 

Don't Assume Every Healthcare Expense Is Covered by Medicare

 

Another misconception is that once you have Medicare, most healthcare-related expenses are essentially taken care of.

 

There are important gaps.

 

For example, Original Medicare generally does not cover most routine dental care, hearing aids and exams for fitting them, or routine eye exams for prescription eyeglasses. (Medicare)

 

Depending on the type of Medicare coverage selected, some of these services may be available through other coverage, but couples should understand what their particular plan does and does not cover.

 

This is why we believe healthcare budgeting should include more than premiums.

 

Think about the entire healthcare experience: premiums, deductibles, copays, prescriptions, dental care, hearing, vision, and an appropriate reserve for expenses that are difficult to predict.

 

Higher-Income Retirees Should Understand IRMAA

 

For higher-income couples, there is another Medicare cost worth understanding.

 

Medicare Part B and Part D premiums can be subject to income-related monthly adjustment amounts, commonly called IRMAA. In other words, higher-income beneficiaries may pay higher Medicare premiums. (Medicare)

 

This can become relevant around retirement because taxable income doesn't necessarily fall immediately when someone stops working.

 

A retiree may sell appreciated investments, exercise equity compensation, receive deferred compensation, take significant retirement-account distributions, or complete Roth conversions. Those decisions can affect taxable income and potentially Medicare-related costs, depending on the applicable rules and timing.

 

That doesn't mean you should avoid an otherwise appropriate financial decision simply because it could affect Medicare premiums.

 

It means taxes, retirement income, investments, and healthcare shouldn't always be planned independently.

 

An HSA Can Become a Valuable Retirement Healthcare Resource

 

For couples who are still working and eligible to contribute to a Health Savings Account, an HSA can deserve particular attention as retirement approaches.

 

HSAs receive favorable federal tax treatment. Eligible contributions may be deductible or excluded from income, earnings can accumulate tax-free, and distributions used for qualified medical expenses can generally be tax-free. The money also stays in the account until it is used, so an HSA can potentially become a resource for healthcare expenses later in life. (IRS)

 

After age 65, HSA funds can generally be used tax-free for certain Medicare and other eligible healthcare premiums, although Medicare supplemental policy premiums such as Medigap generally do not qualify for this particular treatment. (IRS)

 

There is also an important transition rule to understand: once an individual is enrolled in Medicare, that individual can no longer contribute to an HSA, and retroactive Medicare coverage can affect contribution eligibility. (IRS)

 

For couples approaching 65, coordinating HSA contributions with Medicare enrollment is therefore another item worth reviewing before retirement.

 

Healthcare Planning and Long-Term Care Planning Are Not the Same Thing

 

This may be one of the most important distinctions in the entire conversation.

 

Traditional health insurance and Medicare are primarily designed to address medical care.

 

Long-term care is different.

 

Long-term care often involves assistance with everyday activities such as bathing, dressing, eating, toileting, mobility, or supervision associated with cognitive impairment. Care may be provided at home, through adult day services, in assisted living, or in a nursing facility.

 

Medicare explicitly states that it does not pay for most long-term custodial care, whether that care is provided at home, in the community, or in a facility. (Medicare)

 

That means a couple can have excellent health insurance and still have a significant uncovered long-term care risk.

 

For Couples, One Person's Care Event Can Affect Two Retirement Plans

 

Long-term care can be especially important for couples because the financial consequences may extend beyond the spouse who needs care.

 

Imagine one spouse develops dementia and eventually needs significant assistance while the other spouse remains healthy.

 

The household may now need to fund two very different needs simultaneously: care for one spouse and a normal retirement lifestyle for the other.

 

If substantial care expenses are paid directly from investment accounts, those withdrawals may reduce the assets available to support the healthy spouse for the remainder of their life.

 

There can also be a human cost.

 

Couples sometimes assume, “My spouse will take care of me.” That may be part of the plan, but it is worth thinking realistically about what that means. A spouse of a similar age may eventually have their own physical limitations or health concerns. Providing significant hands-on care can also be demanding.

 

Long-term care planning therefore isn't simply about asking: “How would we pay for care?”

 

It is also about asking: “Where would we want to receive care, who would provide it, and how would a care event affect the other spouse?”

 

Depending on the couple, potential strategies could include relying on personal assets, insurance, family support, or some combination. There is no single solution that is appropriate for everyone.

 

Healthcare Costs Don't Necessarily Move Together for Both Spouses

 

Retirement planning sometimes treats couples as if their financial lives will move in parallel.

 

Healthcare is a good reminder that they may not.

 

One spouse may have significant prescription costs while the other has very few. One may develop a chronic condition. One may need long-term care. One may live substantially longer than the other.

 

That uncertainty is precisely why we generally don't believe the goal should be to predict healthcare costs perfectly.

 

You can't.

 

Instead, the goal is to build enough flexibility into the retirement plan that an unexpected healthcare expense does not automatically undermine everything else the couple is trying to accomplish.

 

That may mean maintaining appropriate liquidity, understanding insurance coverage, building healthcare expenses into retirement projections, evaluating long-term care risk, and periodically revisiting the assumptions as circumstances change.

 

Questions Couples Should Ask Before Retirement

 

As retirement gets closer, consider working through questions such as:

 

• Will either of us retire before age 65?
• If so, where will our health insurance come from before Medicare?
• Are we eligible for coverage through a spouse's employer, COBRA, retiree coverage, or the Marketplace?
• When will each spouse transition to Medicare?
• What will our expected premiums and out-of-pocket healthcare expenses look like?
• Could our income affect Medicare premiums?
• Do we have an HSA, and how does it fit into our retirement healthcare strategy?
• What expenses aren't covered by our expected Medicare or supplemental coverage?
• How would we fund a significant long-term care event?
• Where would each of us prefer to receive care?
• If one spouse needs care, how would we protect the other spouse's lifestyle and financial security?
• Have healthcare expenses been incorporated into our retirement income plan?

 

You don't need to know exactly what healthcare will cost at age 82.

 

But you should understand how your plan is designed to respond if those costs are significantly different from what you expected.

 

Frequently Asked Questions

 

How do I pay for health insurance if I retire before 65?

Potential options may include coverage through a working spouse, COBRA, employer retiree coverage, or a Marketplace plan, depending on eligibility and circumstances. Losing employer-sponsored coverage due to retirement can qualify someone for a Marketplace Special Enrollment Period. (HealthCare.gov)

 

Is Medicare free after age 65?

No. Although most people receive premium-free Part A, Medicare can still involve Part B and potentially Part D premiums, deductibles, coinsurance, copayments, supplemental coverage costs, and expenses for services that aren't covered. (Medicare)

 

Does Medicare cover long-term care?

Generally, Medicare does not cover most long-term custodial care. Medicare distinguishes long-term care from covered skilled medical or rehabilitative services. (Medicare)

 

Should couples include long-term care in their retirement healthcare plan?

It can be valuable to evaluate it separately because traditional health insurance and Medicare generally do not cover most long-term custodial care. How a couple prepares will depend on their assets, family situation, preferences, health, insurance options, and broader financial plan.

 

Should healthcare costs affect when we retire?

They can. For someone retiring before Medicare eligibility, the cost and availability of health coverage may be an important part of determining whether the retirement income plan is sustainable. Healthcare shouldn't necessarily dictate the retirement date, but it should be incorporated into the analysis.

 

Key Takeaway

Healthcare planning in retirement is really two conversations.

 

The first is health insurance and medical expenses: How will you obtain coverage before Medicare? What will Medicare and related coverage cost after 65? What out-of-pocket expenses should you anticipate?

 

The second is long-term care: What happens if one of you eventually needs assistance that traditional health insurance or Medicare generally doesn't cover?

 

For couples, both conversations need to consider two people who may retire at different ages, have different health needs, and experience very different paths through retirement.

 

A thoughtful retirement plan doesn't need to predict exactly what will happen.

 

It needs to be prepared for more than one possibility.

 

Final Thoughts

 

At Cypress Wealth Services, we believe retirement planning is ultimately about protecting the lifestyle you've worked to create.

 

Healthcare is an important part of that conversation because it sits at the intersection of several retirement decisions. It can influence when you retire, how much income you need, how you use your savings, how you approach taxes, and how you prepare for the possibility that one spouse may someday need care.

 

For couples considering retirement, we would start by creating a healthcare timeline for each spouse. Determine what coverage exists before Medicare, understand what changes at Medicare eligibility, estimate the ongoing costs that should be incorporated into the retirement income plan, and then have a separate conversation about long-term care.

 

The goal isn't to eliminate healthcare uncertainty. That isn't realistic.

 

The goal is to make sure that a healthcare event doesn't automatically become a financial event that changes the retirement you planned for both of you.

 

 

About the Author

 

Ross Biesinger is a Senior Wealth Advisor with Cypress Wealth Services. Ross works with individuals and families approaching and living in retirement, helping them navigate the interconnected decisions surrounding retirement income, investments, healthcare, taxes, and long-term financial planning. His approach emphasizes helping clients understand how the different pieces of their retirement plan work together so they can make thoughtful decisions as their needs and priorities evolve.

 

Retire With Confidence and Clarity is an educational series focused on helping individuals and families better understand the financial decisions that accompany retirement.

 

This article is provided for general educational purposes only and should not be construed as personalized investment, tax, legal, insurance, healthcare, Medicare, or financial planning advice. Medicare rules, premiums, tax laws, insurance coverage, Marketplace eligibility, long-term care costs, and individual circumstances vary and may change over time.