You've probably noticed your doctor's office visit isn't what it used to cost.
And that's before a hospital stay, a prescription that insurance only partially covers, or a specialist who's out of network.
For retirees and those approaching retirement, healthcare isn't just a line item — it's often the line item that blows up the whole plan.
Today, we're going to talk about what healthcare actually costs in retirement, where Medicare falls short, and one specific tax-free account that most retirees either underuse or close too soon.
Here's the thing about HSAs: the account itself has to be set up correctly to maximize the tax advantages.
Most people either don't have one, have one at a subpar provider with limited investment options, or have one they haven't touched in years.
Lively is one of the most straightforward HSA platforms available — no account fees, real investment options, and an interface that doesn't require a finance degree to navigate.
If you don't have an HSA yet, or if you want to move an existing one to a platform that actually lets you invest and grow it, opening an account takes less than 10 minutes.
You've spent decades building savings.
Don't let healthcare costs drain them without a plan.
DEEP DIVE
The strategy: What a $300,000 Healthcare Bill Looks Like — And How to Prepare for It
Let's start with the number that stops people cold.
The average retired couple will spend over $300,000 on healthcare costs during retirement.
That figure doesn't include long-term care.
And Medicare — the program most people are counting on to cover the bulk of it — has significant gaps that catch retirees off guard every single year.
Here's where Medicare actually falls short:
Medicare Part A covers hospital stays, but it doesn't cover everything inside them.
Part B covers doctor visits and outpatient care, but it comes with a monthly premium that goes up if your income crosses certain thresholds (more on that in a future issue).
Part D covers prescriptions — but there's a deductible, there are copays, and the formulary changes each year.
What Medicare doesn't cover at all: most dental, vision, hearing, and long-term care.
The long-term care number nobody wants to look at:
The national median cost for a private room in a nursing home is now well above $100,000 per year.
Assisted living runs $60,000 to $80,000 annually in most markets.
The average stay in a long-term care facility is 2.5 years — but plenty of people need care for five, seven, or ten years.
That's not a scare tactic. That's just the math.
So what do you do with all of this?
The most underused tool in retirement healthcare planning is also one of the most tax-advantaged accounts in the entire tax code.
It's a Health Savings Account — an HSA.
Here's why it's different from everything else:
Contributions go in pre-tax (you get a deduction now)
The money grows tax-free
Withdrawals for qualified medical expenses come out completely tax-free
That's triple tax-free. No other account does that.
And here's what most people get wrong: they stop contributing the moment they leave their job.
Or they treat it like a spending account and drain it for current medical costs instead of letting it compound.
If you have access to an HSA and you're using it correctly, you're essentially building a dedicated tax-free war chest for the healthcare costs Medicare won't cover.
After age 65, the rules expand even further. You can use HSA funds for Medicare premiums, dental, vision, and hearing — all tax-free.
If you withdraw for non-medical expenses after 65, you just pay ordinary income tax. No penalty. It essentially becomes a second IRA at that point.
The key is starting one, funding it, and letting it grow.
WEEKLY MAILBAG
"I turn 65 next year. Do I have to sign up for Medicare even if I'm still covered by my wife's plan?" — Gary T., North Carolina
Great question, Gary — and the answer depends on the size of your wife's employer.
If her employer has 20 or more employees, her plan is considered primary and you can delay Medicare Part B without penalty.
But if the employer has fewer than 20 employees, Medicare becomes primary even if you're still covered at work — and you'll want to enroll on time to avoid a gap in coverage.
The Part B late enrollment penalty is 10% per year for every year you were eligible but didn't enroll — and unlike most penalties, it's permanent.
Worth a quick call to her HR department before your 65th birthday to confirm which situation applies to you.
MARKET MINUTE
The 10-year Treasury yield is hovering around 4.3% this week, keeping fixed-income options competitive for retirees looking for predictable, low-risk income outside of equities.
Stay safe, stay invested, and I'll see you in your inbox next Tuesday.
Want to open up a health savings account? Get started today with the experts from Lively.