The Price of Getting Sick in America: A $172,500 Retirement Bill and $220 Billion in Medical Debt
A 65-year-old retiring in 2025 needs an estimated $172,500 for health care, while Americans carry at least $220 billion in medical debt. Here is what the numbers say — and how to plan around them.
A 65-year-old who retired in 2025 can expect to spend an average of $172,500 on health care over the rest of their life — and that figure excludes long-term care, dental, and vision entirely, according to Fidelity Investments' 2025 Retiree Health Care Cost Estimate. Meanwhile, people in the United States collectively owe at least $220 billion in medical debt, per a Peterson-KFF Health System Tracker analysis of federal survey data. Those two numbers describe the same problem from opposite ends: health care is the largest expense most Americans never actually plan for. This article lays out what the data shows about what getting sick costs — before retirement, during it, and when the bills outrun the savings.
Key statistics at a glance
- $5.3 trillion — total US health spending in 2024, or $15,474 per person, up 7.2% in a year (CMS Office of the Actuary, published in Health Affairs, 2026).
- 66.5% of personal bankruptcies involved illness or medical bills as a contributing factor — roughly 530,000 families per year (American Journal of Public Health, 2019).
- $6,459 — average annual out-of-pocket health spending by a Medicare beneficiary in 2023 (KFF).
The $5.3 trillion backdrop
Individual medical bills sit on top of a system whose total cost keeps compounding. US national health expenditures reached $5.3 trillion in 2024 — 18% of GDP — driven not primarily by price increases but by greater use and intensity of care: hospital spending rose 8.9%, physician and clinical services 8.1%, and retail prescription drugs 7.9%, according to the CMS Office of the Actuary's report in Health Affairs.
The trajectory matters more than the snapshot. CMS actuaries project total spending will hit $8.6 trillion by 2033, with per-capita spending climbing from $15,474 in 2024 to roughly $24,200 — and health care absorbing 20.3% of GDP, per projections published in Health Affairs in 2025. Anyone retiring in the next decade should assume the underlying cost of care will be meaningfully higher every single year of their retirement.
The $172,500 question: what retirees actually pay
Fidelity's 2025 estimate assumes a 65-year-old on original Medicare (Parts A, B, and D). Medicare is not free coverage — it is cost-sharing coverage. Here is where Fidelity's estimate says the money goes:
| Category | Share of retirement health costs |
|---|---|
| Medicare Part B and Part D premiums | 43% |
| Other medical expenses (copays, coinsurance, deductibles) | 47% |
| Prescription drugs (out-of-pocket) | 10% |
Source: Fidelity Investments, 2025 Retiree Health Care Cost Estimate.
KFF's affordability research puts annual numbers on the same reality: Medicare beneficiaries spent an average of $6,459 out of pocket in 2023, and premiums plus cost-sharing for Parts B and D alone consumed about 25% of the average Social Security benefit in 2025. Half of Medicare beneficiaries lived on income below $43,200 in 2024, per KFF — which is why a five-figure health year can destabilize an otherwise workable retirement budget.
Two gaps deserve special attention. First, the Fidelity estimate excludes long-term care, dental, vision, and over-the-counter medication. Second, expectations are badly miscalibrated: Fidelity's 2025 survey found 1 in 5 Americans have never considered retirement health costs at all, and 37% plan to simply "rely on Medicare" — the very program whose premiums and cost-sharing make up the bulk of the $172,500.
Medical debt: who owes, and how much
The Peterson-KFF Health System Tracker analysis of the Census Bureau's 2021 Survey of Income and Program Participation found that about 20 million adults owe medical debt of $250 or more, 14 million owe over $1,000, and 3 million owe more than $10,000. Under the broader definition used in KFF's 2022 Health Care Debt Survey — which counts medical bills sitting on credit cards, payment plans, and money borrowed from family — 41% of adults currently carry health care debt, and 57% have carried it within the past five years.
The debt is not evenly distributed. Per the Peterson-KFF analysis, 10% of adults ages 50–64 report medical debt, versus 6% of those 65–79 — the drop at Medicare age is real, but it does not zero out. Adults in fair or poor health with low-to-middle incomes carry medical debt at a 22% rate, and 13% of Black adults report medical debt versus 8% of white adults.
The consequences ripple far beyond the balance itself. In KFF's 2022 survey, among adults with health care debt:
- 63% cut spending on food, clothing, or basic household items
- 48% used up all or most of their savings
- 64% postponed or skipped needed care because of cost
- 18% said they never expect to pay the debt off
Notably, 22% of adults 65 and older reported owing money for medical or dental bills — with dental care a leading source, since traditional Medicare does not cover it.
When the safety net becomes GoFundMe
Two peer-reviewed studies show what happens when costs exceed both insurance and savings. A 2019 study in the American Journal of Public Health, drawing on a random sample of bankruptcy filers from 2013–2016, found that 66.5% of personal bankruptcies involved illness or medical bills as a contributor — essentially unchanged from before the Affordable Care Act, and equivalent to roughly 530,000 affected families per year.
Crowdfunding has become the informal backstop, and the data says it works poorly. A 2022 American Journal of Public Health study of 437,596 US medical GoFundMe campaigns from 2016 to 2020 found they raised more than $2 billion from 21.7 million donations — but only 12% of campaigns met their goal, 16% received no donations at all, and campaigns in communities with more medical debt and less insurance raised the least. Charity, in other words, flows least reliably to the people who need it most.
The HSA gap: the tool most people aren't using
Health savings accounts are the only triple-tax-advantaged vehicle in the US code — deductible going in, tax-free growth, tax-free out for qualified medical costs — yet adoption lags badly among the people closest to retirement. Fidelity's 2025 survey found only 23% of Americans contribute to an HSA to prepare for retirement health costs, just 15% of adults ages 55–64 have one, and 52% of HSA holders in that age band don't realize an HSA can function as a retirement savings vehicle at all. Savers 55 and older can add a $1,000 annual catch-up contribution on top of standard limits.
The market itself is growing fast around them: HSAs held nearly $174 billion across 41.7 million accounts at year-end 2025, up 19% in a year, with invested HSA assets up 33% to about $85 billion, according to Devenir's 2025 Year-End HSA Research Report. But only about 10% of accounts hold invested dollars — most HSA money sits in cash, forfeiting the growth that makes the account useful over a 20-to-30-year retirement.
A planning sequence that matches the numbers
The data points to a fairly specific order of operations:
- Close the coverage gap first. Uninsured and part-year-insured adults carry medical debt at nearly double the rate of the continuously insured (14% vs. 8%, per Peterson-KFF). If you're between jobs, self-employed, or retiring before 65, continuous health coverage is the single most effective medical-debt prevention tool the data identifies.
- Fund the HSA — and invest it — if you're eligible. Treat it as a retirement health account, not a checking account for copays. The 55+ catch-up adds $1,000 a year.
- Budget retirement health care as a line item, not a contingency. A realistic single-person planning figure is Fidelity's $172,500 — roughly $6,500 a year in Medicare-era out-of-pocket costs at current KFF averages, rising with medical inflation.
- Build guaranteed income to cover fixed health costs. Since Part B and D premiums plus cost-sharing already absorb about a quarter of the average Social Security check (KFF, 2025), pairing Social Security with a retirement annuity can ensure premiums are always paid from income rather than from drawn-down savings in a bad market year.
- Don't count on the backstops. The bankruptcy and crowdfunding data are clear: the informal safety nets underperform exactly when they're needed.
The bill arrives either way
Every number in this article describes the same choice framed two ways. Health care in retirement will cost a typical 65-year-old six figures whether or not they planned for it; the difference is whether it's paid from a funded HSA and steady income, or from depleted savings, credit cards, and a fundraising page with a 12% success rate. The planning window matters most in the 10–15 years before Medicare — the same 50–64 age band where medical debt peaks at 10%. If you're in that window, get a coverage review and put real numbers on your own version of the $172,500.
Frequently asked questions
How much should I budget for health care in retirement?
Fidelity Investments' 2025 estimate is $172,500 for a single 65-year-old on original Medicare, covering premiums, copays, deductibles, and prescriptions over a full retirement. It excludes long-term care, dental, and vision, so treat it as a floor rather than a ceiling. The estimate has risen every year, up more than 4.5% from 2024 alone.
Doesn't Medicare cover health care costs for retirees?
Medicare covers much of the cost of care, but beneficiaries still paid an average of $6,459 out of pocket in 2023, according to KFF. Part B and Part D premiums plus cost-sharing consumed about 25% of the average Social Security benefit in 2025, and traditional Medicare excludes most dental, vision, hearing, and long-term care.
How many Americans have medical debt?
By the strict definition — unpaid medical bills of $250 or more — about 20 million adults, or roughly 1 in 12, per the Peterson-KFF Health System Tracker's analysis of 2021 Census data, totaling at least $220 billion. Under KFF's broader 2022 definition that includes medical bills on credit cards and money borrowed from family, 41% of US adults currently carry health care debt.
Do medical bills really cause most bankruptcies?
A 2019 study in the American Journal of Public Health found illness or medical bills contributed to 66.5% of personal bankruptcies among filers surveyed from 2013–2016 — about 530,000 families a year. Medical costs are rarely the sole cause, but they are the most commonly cited contributor, and the rate was essentially unchanged by the Affordable Care Act.
Sources
- Fidelity Investments — Fidelity Releases 2025 Retiree Health Care Cost Estimate (2025)
- Fidelity Investments — How to Plan for Rising Health Care Costs (2025)
- Peterson-KFF Health System Tracker — The Burden of Medical Debt in the United States (2024)
- KFF — Health Care Debt in the U.S.: The Broad Consequences of Medical and Dental Bills (2022)
- KFF — Key Facts About Health Care Affordability for People with Medicare (2025)
- Health Affairs / CMS Office of the Actuary — National Health Care Spending Increased 7.2 Percent in 2024 (2026)
- Health Affairs / CMS Office of the Actuary — National Health Expenditure Projections, 2024–33 (2025)
- American Journal of Public Health — Medical Bankruptcy: Still Common Despite the Affordable Care Act (2019)
- American Journal of Public Health — Medical Crowdfunding and Disparities in Health Care Access in the United States, 2016–2020 (2022)
- Devenir — 2025 Year-End Devenir HSA Research Report (2026)