What keeps you up at night? For millions of Americans, it’s the question of how they will fund their health care expenses in retirement.

A survey from Franklin Templeton Investments about retirement costs found that Americans are most concerned about how they’ll cover medical and pharmaceutical bills. Those fears are well-founded, given the high costs of nursing homes, assisted living, hospitalization and prescription drugs.

Even a healthy retirement could have a hefty price tag; an analysis from Fidelity Investments estimated that a healthy 65-year-old couple retiring this year will need $280,000 to cover their health costs in retirement.

“Knowing your options and planning financially for them well ahead of retirement is crucial,” said Eric Kearney, an investment advisor from Florida.

“With proper planning, health care costs in retirement are within the means of average and wealthy Americans, provided they are able to afford a Medicare supplement policy. But you have to understand how the Medicare system works and what you can expect to pay in out-of-pocket costs throughout your retirement. You must budget for them. For retirees who have enjoyed strong employer health benefits and are unprepared for retirement, the out-of-pocket cost difference can cause an uptick in blood pressure.”

Kearney explains the costs and coverages of different parts of Medicare:

• Medicare Part A. Part A was the original Medicare, covering hospitalization. There are no monthly premiums, although a $1,340 deductible applies as of this year.

“After 60 days of hospitalization, the patient becomes responsible for a $335 per day coinsurance,” Kearney said. “After 90 days, the coinsurance goes to $670 per day. After 60 more days, the patient’s coverage runs out.”

• Medicare Part B. The optional Part B covers doctor and treatment costs.

“Premiums average $134 per month and patients are responsible for 20 percent coinsurance,” Kearney said. “And with a 20-percent Part B coinsurance, many seniors can expect to pay several thousand dollars or more out of pocket each year. If you have long-term conditions requiring extensive care, it is easy to see how Part A and Part B out-of-pocket costs can eat away even a large nest egg.”

• Medicare Parts C and D. Part C, also called the Medicare Advantage plan, is run by private companies and requires a larger premium.

“It provides more coverage options such as vision, dental, pharmaceutical and wellness programs,” Kearney said. “Part D covers prescription drugs, and the older we get, the more likely we are to need them.”

• Medicare Supplement Policy. “Without this, the assets you worked all your life to accumulate could disappear,” Kearney said. “Since a long-term hospital stay or chronic illness could send your medical bills into five or even six figures, you stand to lose some or all of your assets if you do not protect them with a Medicare supplemental policy.”

Also known as Medigap policies, these are offered by private insurance companies to supplement expenses that Medicare Parts A and B do not typically cover.

“If a stress-free, comfortable retirement is your goal,” Kearney said, “you need to prepare for health care expenses, and it’s never too early to start.”