Your healthcare could now cost $185,500 in retirement — up 7.5% from a year ago. And that doesn’t include long-term care

Fidelity’s annual retiree healthcare calculation is meant to raise awareness around what could be one of the largest expenses that retirees may face, helping them with making informed decisions about their financial planning.

“Financial planning for retirement is about more than reaching a savings target, especially as retirement itself continues to evolve,” Shams Talib, head of Fidelity Workplace Consulting, told MarketWatch. “Whether Americans fully stop working, phase into their retirement or pursue new ways to stay engaged, healthcare consistently remains one of the largest expenses they will face.”

Many retirees misunderstand Medicare’s coverage

Fidelity’s annual retiree healthcare calculation assumes the average American retiree is enrolled in Medicare Part D, which covers prescription drugs, as well as Part A and Part B, which cover doctor visits and most inpatient hospital stays.

This means retirees with Medicare coverage can still expect to pay nearly $200,000 on healthcare throughout their retirement. Fidelity’s data, however, reveals that 54% of preretirees believe all of their healthcare expenses in retirement will be covered by Medicare.

“Medicare is a critical part of retirement health coverage, but it does not eliminate every healthcare expense,” Steve Betts, head of Fidelity Health, told MarketWatch. “This estimate helps illustrate why both preretirees and retirees alike will benefit from carefully considering out-of-pocket expenses and how they will pay for them as they build out their retirement income strategy.”

While Fidelity’s estimation takes Medicare into account, it doesn’t factor long-term care such as assisted living, nursing-home costs or home healthcare support into its calculation. And long-term healthcare, as MarketWatch notes, can be costly.

For example, hiring a nonmedical caregiver for home healthcare support can cost over $80,000 per year, assuming said caregiver works a 44-hour week. Assisted living has a median cost of $74,400 per year, while a private room at a nursing home can cost more than $129,000 annually.

The U.S. Department of Health and Human Services notes that 70% of adults that reach 65 years of age will eventually develop long-term care needs, while 48% will require some form of paid healthcare in retirement, MarketWatch reports.