Retirees Often Underestimate These Three Big Medical Expenses: Drugs, remote locations and concierge care can add tens of thousands of dollars to retirement healthcare costs

 

“Ray Loewe, an 83-year-old retiree in Lancaster, Pa., spent his career as a financial planner guiding people through the complexities of preparing for retirement.

 

But it wasn't until he was well into his own retirement and switched to a concierge medical practice that charges an annual fee for more-personalized care that he learned a hard truth: He had significantly underestimated the cost of healthcare.

 

Americans tend to go into retirement in relatively good health and well aware they will pay premiums for such things as Medicare, supplemental Medicare insurance and Medicare drug plans and even long-term-care insurance.

One widely used estimate for such healthcare costs -- from financial-services titan Fidelity -- pegs them at $330,000 for the average couple throughout retirement, or $165,000 for an individual, and those figures don't include long-term-care insurance.

 

But as individuals get farther into retirement, many will face extra costs that recur year after year -- and aren't accounted for in most planning scenarios. All told, these unanticipated costs can add tens of thousands of dollars, or more, to the healthcare tab in retirement.

 

"When you first retire you feel fine, but later medical needs appear out of nowhere," says Loewe. His advice today to people approaching retirement: "Be prepared to spend more on healthcare."

 

Here are three frequently unanticipated costs and how to plan for them:

 

Uncovered drugs

 

A new federal requirement for Medicare drug insurance, known as Part D Medicare, says that people using Medicare drug plans won't have to pay more than $2,000 out of pocket for the drugs covered by their drug insurance each year.

 

But there is a catch. The $2,000 cap applies only to drugs that a Medicare Part D insurance or Medicare Advantage company tells patients up front each year will be covered through what's known as the "formulary list."

 

There are almost 500 different drug-insurance policies offered to people on Medicare and they all differ on what they cover and the portion patients must cover. That means that retirees can't count on the $2,000 annual cap on their medications.

 

Consider the drug Imbruvica, which treats blood cancer. It recently ran $14,900 a month and Medicare negotiated a reduction to $9,000. If a Medicare patient has a drug plan that has Imbruvica on its formulary list, he or she won't have to pay more than $2,000 for it during the year.

 

But if Imbruvica isn't on a patient's Part D plan formulary list, the $2,000 cap on Medicare drugs won't apply and the patient could face a monthly cost of $9,000, says Juliette Cubanski, deputy director of the Medicare policy program for KFF, a healthcare-policy research organization formerly known as the Kaiser Family Foundation.

 

The key to avoiding such costs, says Cubanski, is to check formulary lists for expensive drugs before selecting a Medicare drug insurance plan each year. People can change their insurance once a year during what are known as open enrollment periods, and insurance companies also change formulary lists from one year to the next.

 

Medical isolation

 

In isolated, rural areas such as much of Alaska, people realize that even routine medical care is likely to depend on air travel to cities, so it is a way of life to budget for small private planes and multinight hotel stays.

 

Yet in other areas of the country, people pick dream homes away from the bustle of urban life early in retirement and then are shocked when health issues crop up later and travel costs mount, says Carolyn McClanahan, a medical doctor and Jacksonville, Fla., financial planner.

 

She recalls one client who built his dream retirement home near Lake City, Fla., only to learn when he developed a serious lung condition that the nearest treatment was hours away and in-home caregivers wouldn't travel to his remote property even though he had a long-term-care insurance policy. Ultimately, to get the care he needed, the man moved into a nearby nursing home.

 

For people who can afford it, an alternative can be to use charter medical flights to top doctors or hospitals, but for most people such transportation, at $20,000 or more one-way, is prohibitively expensive.

 

When picking a retirement location, McClanahan says, "You have to decide whether lifestyle or the best medical care matters most to you."

 

Concierge care

 

In some areas of the country with large affluent retiree populations, doctors increasingly are turning away patients on Medicare and accepting new patients only if they pay an annual fee for concierge medicine. So retirees can feel as if they have little alternative than to pay thousands of dollars a year for the security of a reliable doctor.

 

The average concierge retainer runs $3,500 a year, says Tom Blue, a Richmond, Va., concierge-practice adviser and former executive director of the American Academy of Private Physicians. Annual fees of $5,000 to $10,000 are common and "$25,000, which was the ceiling in 2012, is not rare anymore" -- especially in places like New York City, Los Angeles and Silicon Valley, Blue adds.

 

Blue estimates there are about 12,000 concierge doctors nationally and about 20,000 doctors who don't require annual retainers, but who are "direct pay." That means patients must pay for doctors' appointments out of pocket rather than with Medicare or other insurance, although insurance still pays for medical tests.

 

The group remains small compared with the roughly 254,000 practicing primary-care doctors for adults nationally, but Blue estimates it is growing at about 8% a year.

 

And as more doctors in a community become concierge, there are fewer doctors left who take Medicare or other insurance, says Adam Leive, a health economist at the University of California, Berkeley.

 

For Loewe, the retired financial planner, the changeover to concierge care came when the longtime doctor he and his wife relied on near their home in suburban Philadelphia began showing signs of burnout. The doctor's office had become chaotic, and after staff lost his wife's medical records, the couple switched to a concierge doctor. After moving to Lancaster three years ago, they again found a concierge doctor.

 

That decision now costs the couple $3,200 a year.

 

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Gail MarksJarvis is a writer in New York. She can be reached at reports@wsj.com” [1]

 

1. Investing Monthly (A Special Report) --- Retirees Often Underestimate These Three Big Medical Expenses: Drugs, remote locations and concierge care can add tens of thousands of dollars to retirement healthcare costs. Marksjarvis, Gail.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 June 2025: R1.