When developing your retirement plan and planning how much money you will need to cover expenses, don't forget to estimate health care costs.

According to Fidelity Investments, a 65-year-old couple retiring will need an average of $275,000 (today's dollars) to cover medical costs throughout retirement.

How Medicare Works

Medicare Part A provides premium-free hospitalization insurance. Medicare Part B covers 80% of doctors' visits, lab work, and some medical equipment. Medicare recipients also can buy supplemental insurance to cover what Medicare Part B doesn't. They can also enroll in a Medicare Part D drug program. Another options for retiree’s is to purchase an all-in-one Medicare Advantage plan from an insurance company approved by Medicare.

Steps To Take Now

Here are helpful steps to take now:

• Increase your income and assets. You can do this by working longer or working a part-time job during retirement. If your employer offers a matching contribution to your 401(k) plan, at the least, invest up to the level of that match.
• Keep healthy. Exercise, maintain your proper weight, and make healthy food choices.
• Find the right health plan to fit your needs. What services, doctors and support do you need? Choose a plan with the services that match your requirements instead of the health plan with the lowest monthly premium.
• Build your 401k plans and IRA’s. If you qualify, also start saving money in a health savings account (HAS). This is tax-advantaged method to save for future medical costs. Contributions are tax-deductible, or if made through a payroll deduction, reduce your taxable income; account earnings are tax-free; and withdrawals made for qualified medical costs aren't taxed. Once you enroll in Medicare however, you cannot contribute to a HSA.

It is never too early to start saving for the future, especially when you add in health care costs.