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.The new Fidelity Healthcare Costs projection for retirees is out and according to Fidelity Investments the news is good as the amount retirees may pay for their health coverage throughout retirement is slightly lower than last year.

Unfortunately, what Fidelity is reporting and using to market to the public to garner more investments is drastically far off from the actual truth though.

How much is Fidelity stating retirees should expect to pay throughout retirement?


This is the total amount that a 65-year-old couple should pay for the cost of their healthcare throughout retirement, and it is $20,000 lower from the previous year.

How is Fidelity calculating the Fidelity Healthcare Costs projection?

According to Fidelity Investments the Fidelity Healthcare Costs projection comes from using the current premiums, deductibles and coinsurance of Medicare and then applying them to an average 65-year-old couple where the female is living until age 85 and the male is living until 82.

Where is Fidelity Investments incorrect with its projection?

If we look at what the Federal Government is stating about Medicare and its future, we can see that the Fidelity Healthcare Costs is, unfortunately, not close to the actual number.

For the Fidelity Healthcare Costs projection to be anywhere near its target of $220,00 the costs of Medicare must inflate by only 3.50% each year for the next 20 years.

This projection by Fidelity Investments is drastically lower than the inflation rate that Federal Government is saying it is going to charge retirees for Medicare in the future.

Please keep in mind that Medicare is a federally run program.

What is the Federal Government saying about the future costs of Medicare?

The Federal Government through the Medicare Board of Trustees is reporting in the 2014 Annual Report that the costs of Medicare will inflate by at least 5.32% over the 8 next years.

The Trustees are also stating that in order for the Medicare program to remain solvent the inflation rate on costs may have to be higher in the future too.

Breakdown of the future of costs of Medicare:

  • Part A: 4.97% inflation rate for co-insurance costs.
    • Supplemental (Medigap) Plans provide coverage for the Part A co-insurance costs and historically charge about 2% more to cover expenses.
    • Medigap Plan F premium – $162.67 a month per person on a national average according to Weiss Ratings.
  • Part B: 4.85% inflation rate for the Part B premium.
    • Part B premium – $104.90 a month per person.
  • Part D premium: 6.18% inflation rate on the National Bid.
  • Part D Deductible: 4.81% inflation on the maximum allowable Deductible.
    • Part D total cost – $67.45 a month per person on a national average.
  • Rate of Inflation on Medicare Costs – 5.19%
  • 2014 Total Cost per couple for Medicare Coverage = $8,040.48.

Actual Healthcare Costs projections according to Federal Government Data:



It appears that Fidelity Investments Healthcare Costs projection is off and by as much as $40,000, but before being too critical of an investment firm getting something so wrong at least they are talking about this cost.

The harsh reality is that when it comes to Medicare and planning for healthcare costs the financial industry has no interest and the reason is simple:

Federal Laws highlight the fact that they way investors are encouraged to invest for their retirement completely contradicts fiduciary advice.

In fact the exact same advice that the financial provides, invest into a Traditional 401(k), which generates a lot of money for them leads directly to higher taxes and lower Social Security benefits for their clients.

The financial industry on a whole is going out of its way to actually harm their clients for their own bottom line.

The question now comes down to when does the Federal Government step in to protect the average investor?

For more information on what your specific Healthcare Costs projection is please see us at Healthcare Retirement Planner or contact an IRMAA Certified Professional (the directory is here).

Dan McGrath