Health Care Costs in Retirement: What L3Harris Employees Need to Know and How to Prepare

Healthcare Provider Update: Healthcare Provider for L3Harris L3Harris Technologies typically provides its employees with healthcare benefits through employer-sponsored insurance plans. The exact healthcare provider may vary based on location and specific employee circumstances, but major insurers commonly used include UnitedHealthcare, Anthem, and Cigna. Potential Healthcare Cost Increases in 2026 In 2026, L3Harris and similar employers are facing significant healthcare cost increases. Reports indicate a projected rise of approximately 8.5% in employer-sponsored insurance costs due to multiple inflationary pressures, including rising medical expenses and increased claims. Additionally, if the federal premium subsidies under the Affordable Care Act expire without renewal, employees may see a drastic rise in their out-of-pocket expenses, compounding the financial impact on both the company and its workforce. Employers are likely to respond by shifting more healthcare costs to employees, necessitating a proactive approach to managing these anticipated changes. Click here to learn more

'L3Harris employees must recognize the importance of early health care planning, as escalating medical expenses and the need for long-term care can quickly deplete retirement savings without strategic budgeting and proactive measures like long-term care insurance and health savings accounts.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

'L3Harris employees should prioritize health care planning as an essential part of their retirement strategy, so they can prepare for the rising costs of medical care, which can significantly impact their financial stability during retirement.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

1. The importance of health care costs in retirement and the impact on retirement savings.

2. Strategies for budgeting for health care expenses, including long-term care insurance and health savings accounts (HSAs).

3. Tools and resources to help L3Harris employees plan for health care costs in retirement.

When planning for retirement, health care expenses are a critical consideration for L3Harris employees. While many retirees believe that Medicare will cover most of their medical bills, the reality is often quite different. Prescription drugs, long-term care, co-payments, and premiums are just some of the out-of-pocket costs that can quickly accumulate, leading to significant financial strain. Over time, these expenses could deplete your retirement savings if not adequately planned for. A thoughtful approach is required to lessen the impact of these rising costs, especially since health care costs are rising at a faster rate than inflation.

Making informed decisions requires an understanding of how lifestyle choices, family medical history, personal health, and inflation can affect health care expenses. L3Harris employees can safeguard their retirement savings by implementing strategies such as investing in long-term care insurance, using employer-sponsored accounts, and purchasing supplemental insurance. This article explores the importance of health care costs in retirement, ways to budget for them, and tools to help L3Harris employees plan ahead.

The Importance of Medical Expenses in Retirement

Sadly, Medicare doesn't cover all medical needs, and health care costs rank among the largest expenses seniors face. While Medicare covers approximately 98.2% of individuals aged 65 and older, ¹  it doesn’t pay for all medical costs. A study by the Kaiser Family Foundation (KFF) found that 22% of retirees have medical debt, ²  largely due to increasing medical expenses and unexpected out-of-pocket costs. Prescription drugs, supplemental health plans, and long-term care services, such as in-home care or nursing facility stays, are common examples of these expenses. With health care costs rising faster than inflation, this can significantly reduce retirement savings, particularly for those unprepared.

As Paul Bergeron, a financial advisor with The Retirement Group, points out, 'L3Harris retirees unprepared for rising health care  costs can face considerable financial challenges and unexpected out-of-pocket expenses.' This makes planning for health care costs crucial, especially considering the impact of inflation, medical advancements, and longer life expectancies on future health care needs.

Budgeting for Health Care Costs in Retirement

While retirees may have little control over how quickly health care prices rise, they can take action to reduce their personal financial risk. The following strategies can help L3Harris employees manage health care expenses during retirement.

Long-Term Care Insurance

One of the largest medical expenses Medicare doesn't cover is non-medical long-term care. According to the 2024 Cost of Care Survey by Genworth and CareScout, the average cost of an assisted living facility is $70,800 per year, while a semi-private room in a skilled nursing facility can cost up to $111,325 annually. ³  Since 69% of individuals who reach age 65 today are expected to require long-term care at some point, ⁴  planning ahead is essential.

Without long-term care insurance, retirees will have to pay for these expenses out of pocket, which can rapidly deplete retirement funds. Purchasing long-term care insurance while in good health is an effective way to reduce the financial impact of these costs. The mid-50s is typically the best time to obtain this coverage. At this stage, people are typically still healthy enough to qualify for reasonable rates and have ample time to pay for the coverage before it's needed. However, premiums tend to rise as individuals age, with increases of 2-4% in their 50s and 6-8% in their 60s. Additionally, applicants over age 70 may struggle to find coverage, as 38.2% of applicants aged 65-69 and 45% of those 70 and older are typically rejected. ⁵

For those seeking both life insurance and long-term care coverage, buying a life insurance policy with a long-term care rider can be a cost-effective solution.

Health Savings Accounts (HSAs)

L3Harris employees with high-deductible health plans (HDHPs) can take advantage of health savings accounts (HSAs) to save for medical expenses on a tax-advantaged basis. HSAs offer three tax benefits: tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for eligible medical expenses. 'The HSA combines the best features of a Roth IRA and a traditional IRA,' says Tyson Mavar of The Retirement Group. 'Contributions are tax-deductible, they grow tax-deferred, and withdrawals for qualified medical expenses, including Medicare premiums, are tax-free.'

Unlike other employer-sponsored accounts, HSAs do not have a 'use-it-or-lose-it' policy, meaning the funds can be carried over from year to year. Contributing to an HSA as retirement approaches can result in substantial savings for future medical costs. For 2025, the contribution limit is $8,550 for family coverage and $4,300 for individual coverage. Individuals 55 and older can contribute an additional $1,000 as a catch-up payment.

Starting an HSA early in one’s career gives ample time to build savings, but even employees in their 50s nearing retirement can benefit from contributing up to the maximum allowed.

Supplemental Insurance and Medicare

While Medicare provides basic coverage, it doesn't cover all medical expenses. For example, routine physical exams, dental, vision, and hearing treatments are not covered by Medicare. These out-of-pocket costs can quickly add up.

Medigap, or Medicare supplemental insurance, can help cover the gaps in Medicare’s coverage. These plans, offered by private insurers, cover expenses like co-payments, co-insurance, and deductibles. Medicare Advantage (Part C) plans, also offered by private insurers, combine basic Medicare with prescription coverage and include regular dental, vision, and hearing care.

By investing in Medigap or Medicare Advantage, L3Harris retirees can reduce the financial burden of unexpected medical costs, though both options carry additional monthly premiums.

Retiree Reimbursement Arrangements (RRAs)

Retiree reimbursement arrangements (RRAs) are employer-sponsored initiatives designed to help retirees pay for medical expenses. L3Harris retirees can take advantage of any available RRAs, which allow them to receive reimbursements for eligible medical expenses, such as Medicare premiums, up to a specified annual limit. Some employers even allow unused funds to roll over from year to year. Since RRAs are fully employer-funded, they provide retirees with additional financial support for health care costs.

Optimizing the use of L3Harris’s RRA, if any, can significantly reduce your retirement medical costs.

Telehealth Services

Telehealth, the remote delivery of medical services, is increasingly popular among retirees. It offers a convenient option for individuals who may have difficulty traveling or leaving their homes to visit a doctor. Telehealth allows retirees to manage minor health issues, prescriptions, and chronic conditions without the need for in-person visits, reducing the incidence of emergency room visits and hospitalizations. Additionally, telehealth services are often more affordable than in-person appointments, contributing to overall savings.

L3Harris employees should check with their health care providers or Medicare Advantage plans to learn about the telehealth services available to them, as some plans may offer enhanced telehealth benefits compared to traditional Medicare.

Preventive Care

Preventive care plays a crucial role in reducing health care costs in retirement. Regular check-ups, screenings, and vaccinations help identify health risks early, lowering the need for more expensive treatments down the road. Research shows that retirees who maintain an active lifestyle and engage in preventive care generally face lower long-term health care expenses.

Financial advisor Tyson Mavar notes, 'Eating well, exercising regulatory, and making other healthy lifestyle choices can help you save untold dollars over time.' Regular physical activity can also reduce cognitive decline, which may lower the need for long-term care in later years.

Featured Video

Articles you may find interesting:

Key Considerations When Budgeting for Health Care Costs

Creating a personalized health care budget is essential for retirees, especially L3Harris employees. Factors such as lifestyle, family medical history, and personal health can significantly influence health care expenses. For instance, retirees with pre-existing conditions may require more frequent doctor visits, prescriptions, and treatments, resulting in higher out-of-pocket costs. While Medicare offers coverage for those with pre-existing conditions, retirees should plan for additional expenses, such as supplemental insurance or necessary treatments.

Family medical history is another important consideration. If there is a history of chronic or serious illnesses in your family, your health care expenses may increase as you age. Conversely, if longevity runs in your family, you may need to prepare for longer-term medical care.

Finally, lifestyle choices directly affect health care costs. Retirees who maintain healthy habits, such as regular exercise and a balanced diet, are less likely to face high medical costs than those who smoke or lead a sedentary lifestyle.

Preparing for the Unexpected

Even with careful planning, unexpected medical expenses may still arise in retirement. As Scottish poet Robert Burns famously said, 'The best-laid plans often go awry,' and retirement savings are no exception. Creating an emergency fund and having backup plans in place are essential to managing unexpected medical costs.

Long-term care insurance, an emergency fund, and supplemental insurance plans such as Medigap or Medicare Advantage can all help lessen the financial impact of unforeseen health care costs.

Resources for Budgeting Health Care Costs

There are several tools and resources available to help L3Harris employees estimate and plan for retirement health care costs:

• Fidelity’s Health Cost Estimator : A free tool that projects future health care expenses.

• Medicare.gov Plan Finder : Helps compare Medicare plans based on prescription costs and coverage.

• AARP Health Care Cost Calculator : An online tool for estimating health care expenses in retirement.

• Financial advisors : Your financial advisor can provide you with personalized estimates and strategies for managing retirement health care costs.

Conclusion

Health care costs must be factored into any retirement plan. Rising medical expenses, inflation, and the need for long-term care can significantly impact retirement savings. By using tools such as long-term care insurance, HSAs, and supplemental Medicare plans, L3Harris employees can proactively plan for health care costs and safeguard their financial future in retirement. Planning for unexpected costs, such as emergencies or unanticipated medical conditions, can help preserve retirement funds throughout your lifetime.

Sources:

1. National Center for Biotechnology Information. ' Association of Medicare eligibility with access to and affordability of care amonjg older cancer survivors .' 23 Mar. 2024.

2. Kaiser Family Foundation. ' What are the Consequences of Health Care Debt Among Older Adults? ' 26 Jul 2024.

3. Genworth and CareScout. ' Genworth and CareScout Release Cost of Care Survey Results for 2024 .' 4 Mar. 2025. 

4. Administration for Community Living. ' How Much Care Will You Need? ' 18 Feb. 2020.

5. American Association for Long-Term Care Insurance. ' Nearly Half Of Oldest Long-Term Care Insurance Applicants Declined .' 

Other resources:

1. Almazora, Leo. 'Healthcare Costs Continue to Rise for Retired Seniors.'  Investment News , 8 Aug. 2024.

2. 'Planning for Healthcare Costs: How Financial Advisers Can Guide Clients.'  Kiplinger , Mar. 2025.

3. 'Retired? Here's 5 Reasons You Still Need an Emergency Fund—Plus How Much It Should Cover.'  Investopedia , 30 May 2025.

4. 'Cancer Treatments Derailed a Boomer's Retirement.'  Business Insider , 28 May 2025.

5. 'The Real Cost of Health Care in Retirement.'  RBC Wealth Management , Oct. 2024.