Charting Hidden Medical Costs: Essential Insights for Harvard Employees

“For Harvard employees approaching retirement, proactively incorporating a 10–15% buffer for less-obvious medical expenses—such as prescription gaps, out-of-network care, and concierge fees—can help preserve long-term financial stability.”– Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

“Harvard employees can strengthen their retirement preparedness by using health savings accounts, annual supplemental plan reviews, and strategic budgeting to cover prescription, out-of-network, and concierge medicine costs.”– Patrick Ray, senior financial advisor at The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

1. The rising costs of prescription drugs

2. Challenges of care accessibility in secondary homes

3. The impact of concierge medicine memberships

Among the biggest and most erratic retirement expenses are health care expenditures. For Harvard employees approaching or in retirement, these costs can pose unique planning challenges. According to Fidelity Investments, a retired couple will spend about $330,000 on health care during their retirement—or $165,000 per individual. ¹  However, this estimate frequently ignores a number of important spending categories that can raise lifetime medical costs by tens of thousands of dollars.

Costs of Prescription Drugs

Although many prescription drugs are covered by Medicare Part D, out-of-pocket costs can mount quickly for Harvard retirees. Known as “donut holes,” coverage gaps could expose beneficiaries to the full cost of specific therapies. Without complete insurance, specialty drugs—especially those used to treat long-term illnesses like multiple sclerosis or rheumatoid arthritis—can cost more than $5,000 a month. ²  Depending on formulary tiers and supplementary plan designs, seniors who take multiple prescriptions may have annual drug expenses ranging from $2,000 to over $10,000. ³

Care Accessibility in Secondary Homes

Medicare Advantage plans sometimes limit coverage to a single geographic service region, yet many Harvard retirees divide their time between primary and seasonal residences. If a retiree spends summers near family in another state or winters in warmer locations, their plan’s provider networks may not cross state lines. Regular specialists or emergency services rendered outside the network may therefore be charged at full fees—often thousands of dollars per incident. A single out-of-network emergency department visit, for instance, may cost more than $2,500 before any insurance reimbursement. ⁴

Memberships for Concierge Medicine

Over the past five years, seniors seeking quick access to doctors have increased their use of concierge medicine. Depending on the degree of access and services offered, annual fees for these individualized practices average between $2,000 to $5,000 per person. ⁵  Concierge care can improve continuity and reduce wait times, but neither Medicare nor most employer-sponsored retiree plans cover these fees, making them an extra ongoing cost that may need to be factored into a retirement budget.

The Value of Thorough Planning

According to Wealth Enhancement senior financial advisor Patrick Ray, “standard retirement forecasts often fail to capture the cumulative impact of these less-visible costs.” He notes that patients often show astonishment when their medical expenses surpass initial estimates by as much as 15% to 20%. Harvard staff can reduce the risk of early asset depletion by building a cautious buffer into long-term income strategies—adding 10% to 15% to expected yearly medical expenses.

Techniques for Mitigating Risk

To help maintain financial stability in retirement, Harvard employees should:

• Compare Supplemental Plans Every Year:  Review Medicare Supplement (Medigap) products and Part D formularies each autumn to obtain the best coverage and costs.

• Use Health Savings Accounts (HSAs):  If you have an HSA balance upon retiring, these tax-advantaged funds can cover qualified medical expenses—including premiums for long-term care insurance—tax-free.

• Plan for Travel-Related Care:  Consider multi-state or national network plans, such as certain Medicare Advantage PPO options, to keep out-of-pocket costs lower when spending time away from your primary residence.

• Examine Concierge Options Carefully:  Before enrolling, estimate how many enhanced services you’ll actually use to decide whether membership fees are worthwhile.

Retirement health care expenditures are not only significant but also highly unpredictable. By identifying and budgeting for prescription medication gaps, out-of-network services, and concierge fees, Harvard retirees can preserve their financial resources and maintain control over their medical decisions.

Learn how to make the most of HSAs, compare supplemental plans annually, and safeguard savings from rising medical bills. You can also uncover hidden retirement health care costs, such as Medicare Part D prescription gaps, out-of-network expenses in secondary residences, and concierge medicine fees—all critical areas for Harvard employees to consider.

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Sources:

1. Fidelity Investments. ' Fidelity Investments Releases 2024 Retiree Health Care Cost Estimate as Americans Seek Clarity Around Medicare Selection .' 8 Aug. 2024. 

2. MedCity News. ' Managing the Specialty Drug Cost Challenge: Is Your Pharmacy Benefits Strategy Ready for 2025? ' by Stanley Crittenden. 19 Nov. 2024. 

3. USA Today. ' Medicare caps seniors drug expenses: What you need to know ,' by Ken Alltucker. 7 Jan. 2025. 

4. GoodRx. ' Using the ER for Non-Emergencies Is Expensive - Here Are Other Options ,' by Geoff Williams. 23 Mar. 2023.

5. PartnerMD. ' Concierge Medicine Costs: What You'll Pay and What to Expect ,' by Melissa Gifford. 1 May 2025.

Other Resources:

1. Centers for Medicare & Medicaid Services.  Understanding Medicare Advantage Plans . Publication no. 12026, 19 Feb. 2025,  www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/12026-stateavgadj2010.pdf .

2. Hallie Levine. “What to Know About Concierge Medicine.”  AARP , 15 Apr. 2019,  www.aarp.org/health/medicare-insurance/info-2019/concierge-medicine.html .

3. Internal Revenue Service.  Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans . 19 Jan. 2025,  www.irs.gov/pub/irs-pdf/p969.pdf .

4. Kaiser Health News. “Doughnut Hole Is Gone, But Medicare’s Uncapped Drug Costs Still Bite into Budgets.”  Kaiser Family Foundation , 17 Jan. 2018,  www.kff.org/medicare/issue-brief/doughnut-hole-is-gone-but-medicares-uncapped-drug-costs-still-bite-into-budgets/ .

5. Trish, Erin, and Sean Dickson. “National Health Expenditures in 2023: Faster Growth As Insurance Coverage Expands.”  Health Affairs , 5 Dec. 2024,  www.healthaffairs.org/content/forefront/national-health-expenditures-in-2023-faster-growth-as-insurance-coverage-expands .