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Fidelity’s 2026 retiree health care cost estimate puts a number on what Medicare actually costs over a retirement: $185,500 for a 65-year-old retiring in 2026, and $371,000 for a couple. That estimate rose 7.5% from the prior year. It assumes you are on Medicare the whole time. It covers premiums, deductibles, coinsurance, and copays, plus some drug costs that Part D does not pay. It does not include long-term care, most dental work, or over-the-counter medicines, so the real lifetime figure for many households runs higher.
The estimate breaks down in an instructive way. Fidelity attributes about 45% of the total to Medicare Part B and Part D premiums, and about 48% to cost sharing: the deductibles, coinsurance, and copays you pay when you use care. Premiums are the predictable half. Cost sharing is the half that depends on your health and your coverage choices. This guide turns both halves into a yearly budget you can plan around.
The fixed layer: premiums you will pay every year
Start with the amounts that arrive whether you see a doctor or not. For 2026, the standard Part B premium is $202.90 a month, or $2,434.80 a year, per person. Add a standalone Part D plan at the CMS projected average of $34.50 a month and you add $414 a year. A Medigap Plan G policy at a typical $160 to $200 a month adds $1,920 to $2,400 a year. The fixed layer for one person on Original Medicare with a supplement lands around $4,800 to $5,250 a year. A couple doubles it.
The Medicare Advantage route shrinks the fixed layer. The average plan premium for 2026 is $14.00 a month by CMS projection, and many plans charge $0 beyond Part B. The fixed layer can be as low as the Part B premium alone, $2,434.80 a year. What changes is the variable layer below. Our comparison of Medicare Advantage total costs shows how the copays fill the gap.
The variable layer: cost sharing
On Original Medicare with Plan G, the variable layer is small by design. You pay the $283 Part B deductible for 2026, and the policy absorbs the 20% coinsurance and the $1,736 Part A hospital deductible that would otherwise follow you through the year. Your drug spending runs through Part D and stops at the $2,100 out-of-pocket cap for covered drugs.
On Original Medicare with no supplement, the variable layer has no ceiling. The 20% coinsurance on a major surgery or a cancer treatment plan can reach tens of thousands of dollars in a single year. In Medicare Advantage, the variable layer is capped by the plan’s out-of-pocket maximum, which federal rules allow up to $9,250 for in-network care in 2026. Budgeting honestly means writing down your worst case, not your expected case, and checking you could pay it in a bad year without raiding long-term savings.
Costs Medicare leaves outside the budget lines
Routine dental care, hearing aids, and eyeglasses sit outside Original Medicare, and most retirees pay for them directly. Fidelity leaves them out of its headline estimate too, along with long-term care. A hearing aid pair, dental implants, or a few years of home care each rival a year of premiums. Our guide to what Medicare does not cover lists the gaps and the products sold to fill them. Set a separate line in the budget for these, even if it is a rough one, because they arrive eventually for most households.
Income changes the budget as well. If your income puts you in an IRMAA tier, add the surcharge to both Part B and Part D for each affected year. At the second tier that is an extra $240.40 a month per person in 2026. Our guide to IRMAA and retirement income explains which income years set which premium years.
A sample annual budget for 2026
For one person, age 65, standard income, Original Medicare with Plan G and an average standalone Part D plan, a realistic 2026 budget looks like this. Part B premiums of $2,434.80. A Part D premium around $414. A Medigap premium around $2,160 at $180 a month. The Part B deductible of $283. Drug copays that vary with your prescriptions, budgeted at $600 for a typical medication list and capped at $2,100 in the worst case. Add $500 to $1,000 for dental, vision, and hearing costs that Medicare does not pay. The total lands between roughly $5,900 and $7,400 for the year, before any long-term care.
That range, multiplied across a 20 to 25 year retirement and adjusted upward for annual premium increases, is how a lifetime figure like Fidelity’s $185,500 comes together. You do not need the whole amount saved on the day you retire. You need a plan that funds roughly $6,000 to $8,000 a year per person, growing over time, from Social Security, savings, or a health savings account if you built one while working.
Review the budget every fall
Medicare prices reset every year. CMS publishes the new Part B premium and deductibles each November, Part D and Medicare Advantage plans mail their annual notices in September, and open enrollment runs from October 15 to December 7. An hour each fall, checking your premium notices and re-pricing your drug plan against your current prescriptions, keeps the budget honest. Start with the full picture in how much Medicare costs in 2026 and adjust your own numbers from there.
