DaVita Retirees Face Rising Health Care Costs: Insights from Patrick Ray & Tyson Mavar

'With health care inflation outpacing general costs, DaVita employees should consider building personalized strategies that include HSAs and emergency reserves to help manage future medical expenses.' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'As medical expenses continue to rise, DaVita employees benefit from proactively incorporating health care costs into their retirement planning through customized approaches like HSAs and dedicated emergency funds.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

1. How health care inflation impacts retirement planning for Fortune 500 employees.

2. Strategies with Health Savings Accounts (HSAs) and emergency medical funds.

3. The need for tailored planning to meet Medicare gaps and long-term care needs.

Managing retirement health care costs calls for thoughtful planning, especially as medical expenses continue to outpace general inflation. Yet, for Fortune 500 professionals approaching retirement, generic guidance often misses the mark. Patrick Ray and Tyson Mavar of The Retirement Group, a division of Wealth Enhancement, recommend a customized approach that factors in health care inflation, coverage choices, tax-efficient tools, and access to liquid funds for unexpected medical events.

Health Care Estimate for Retirees

According to the Fidelity Retiree Health Care Cost Estimate, a 65-year‑old retiring in 2025 may need approximately $172,500 saved to cover health and medical expenses during retirement—an increase of over 4% since 2024. ¹  Notably, this estimate assumes enrollment in Medicare Parts A, B, and D and excludes the costs of long‑term care.

Of that estimate, 44% of the costs would go to Medicare Parts B and D premiums, 47% relate to standard out‑of‑pocket costs (such as co-payments and deductibles), and 9% would be needed to purchase prescription medications. ¹

These trends are particularly concerning given that roughly 20% of Americans say they haven’t considered health care in retirement planning, while 17% haven’t taken any planning steps yet. ²

For its part, the Employee Benefit Research Institute (EBRI) notes that a 65‑year‑old couple with higher prescription drug expenses may need as much as $413,000 to have a 90% likelihood of covering their medical needs in retirement. ³

The Value of a Personalized Retirement Health Care Approach

In light of this data, Ray and Mavar recommend developing a retirement health care strategy tailored to each individual's situation, particularly for those at large employers like Fortune 500. Key components could include:

• - Estimating expected medical needs

• - Using Health Savings Accounts (HSAs)

• - Keeping readily available funds for emergencies

• - Aligning health care coverage with lifespan and income expectations

1. Estimating Your Health Care Budget

Although industry research offers a baseline for average health care costs, it does not consider the full range of medical expenses DaVita employees could face post-retirement. For instance, if you factor in costs related to long-term care, estimates could balloon by an additional $26,000 to $127,750 per year. ⁴

Beyond long-term care, additional cost categories could include:

• - Medicare premiums

• - Prescription medications and co‑pays

• - Services not covered by Medicare (e.g., dental, vision)

Ray and Mavar caution Fortune 500 professionals not to underestimate these figures when planning.

2. Gaps in Preparedness

With 17% of Americans having taken no action to plan for health care in retirement, Ray and Mavar emphasize treating health care planning as a central component—not an afterthought.

3. Making Full Use of HSAs

Ray and Mavar suggest consistently contributing to HSAs during working years. For instance, a 35‑year‑old contributing up to $4,300 annually and assuming a 7% return might accumulate over  $500,000  by age 65, including approximately  $140,000 in tax savings . Only about  30%  of HSA holders currently invest those balances.

In their recent webinar, ' Leveraging HSAs to Reduce Health Care Costs ,' Mavar described benefits such as tax‑free growth and withdrawals for qualified medical expenses for those with high‑deductible health plans.

4. Building an Emergency Medical Reserve

Unexpected diagnoses or emergencies can quickly drain resources. Mavar recommends a separate cash reserve—such as in a money market or high‑yield savings account—outside primary retirement accounts. This may help retirees handle health care shocks without impacting long‑term investments.

• Broader Economic Landscape: Health Care Inflation and Trends

Health care spending is projected to continue rising. In a report published by federal actuaries, U.S. health care spending is expected to rise by 7.1% in 2025—well ahead of general inflation. ⁵  Reasons for this rise range from growing personal health care spending and hospital spending growth, to prescription drugs and physician services. As a result, health care expenses could account for 20% of U.S. GDP by 2033. ⁵

At the same time, many health care insurers report higher medical-loss ratios, indicating increased spending on care—including chronic disease management and mental health services—costs that could be passed down to retirees.

Key Recommendations for Retirement Health Care Preparation

• As Mavar and Ray note, the $172,500 estimate for those retiring in 2025 is simply a starting reference point. Early retirement or long-term care needs could push your total higher.

• If you are among the percentage of people who has not yet considered health care costs in your retirement planning, now is the time to start. By leveraging the triple tax advantages available through HSAs, putting aside sufficient reserves to address medical emergencies, and exploring individual strategies that take your personal coverage choices, retirement timing, and health conditions into account, you can build a safety net that considers your long-term health care spending needs.

Final Thoughts

Health care outcomes and personal circumstances vary widely—especially among long‑time Fortune 500 professionals. A tailored planning strategy—covering realistic spending projections, full use of HSAs, dedicated medical reserves, and thoughtful coverage choices—can help support a more predictable and manageable retirement journey.

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DaVita offers its employees a comprehensive retirement savings plan, including a 401(k) with company match. Employees are auto-enrolled in the 401(k) plan, which features a company match that vests over four years. The plan encourages long-term savings by offering diverse investment options and tools for retirement planning. Additionally, DaVita provides a pension plan to eligible employees, though details on the specific pension formula and eligibility criteria are not as prominently highlighted. For further details, you can refer to their benefits overview pages on their official website

DaVita has faced legal challenges regarding its 401(k) plan. A class action lawsuit alleges that the company allowed excessive recordkeeping costs and offered high-fee investment options. Additionally, DaVita agreed to a settlement related to mismanagement claims.

DaVita Inc. offers stock options and Restricted Stock Units (RSUs) as part of its equity compensation program for eligible employees. The company's stock options are generally awarded to senior management and key employees, allowing them to purchase company stock at a set price after a specific vesting period. These stock options typically have a vesting schedule of three to five years and must be exercised within ten years of the grant date. Restricted Stock Units (RSUs) at DaVita are also primarily awarded to senior employees. RSUs provide the right to receive shares of DaVita stock upon vesting, usually after three to four years, depending on the terms of the grant. Unlike stock options, RSUs do not require the employee to purchase the shares; the shares are delivered outright upon vesting. In 2022, 2023, and 2024, DaVita continued to issue stock options and RSUs as part of its long-term incentive plans. These equity awards are designed to align employee interests with those of shareholders and incentivize performance that contributes to the company's success. Stock options and RSUs are granted based on an employee’s role, seniority, and contribution to the company, with top executives receiving the majority of these awards.

DaVita has implemented a comprehensive approach to health benefits for its employees, with a focus on both physical and mental well-being. Between 2022 and 2024, DaVita has been recognized for its strong commitment to employee health, receiving multiple national awards in areas such as mental health and overall well-being. Medical and Prescription Plans: DaVita offers multiple medical insurance options through national carriers like Anthem and Kaiser Permanente, depending on location. The company also provides an extensive prescription plan that includes coverage for over 300 generic medications at no cost. Dental and Vision Plans: Dental coverage includes services ranging from regular cleanings to orthodontics and dentures, while vision coverage extends to eye exams, lenses, and even discounted laser surgery. Mental Health and Wellness: DaVita places a significant emphasis on mental health, offering programs like the Vitality Points incentive program to promote regular health check-ins. The company also collaborates with Included Health to support LGBTQ+ employees and offers free access to the Headspace app for guided meditation and mindfulness. Specialty Health Programs: DaVita has introduced virtual physical therapy options and a weight loss support program designed to help employees maintain a healthy lifestyle. There is also a focus on supporting diverse employee needs through surrogacy, adoption, and fertility services, as well as backup care for children and the elderly. Recent Developments and Employee Support: DaVita has actively enhanced its wellness initiatives by introducing programs such as Project Reignite, which provides resources like counseling sessions and self-care tips. Additionally, the company continues to focus on holistic care, ensuring that employees, referred to as "teammates," receive support that covers both their professional development and personal health needs. DaVita's dedication to these areas has not only earned it industry recognition but has also fostered a culture where employee well-being is a priority.