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Medicare helps pay for the medical bills of nearly all Americans over age 65. But Medicare doesn't cover every service that seniors need, and many people enrolled in the program still face significant out-of-pocket costs.

A 65-year-old couple enrolled in traditional Medicare, a Medicare Part D prescription drug plan and a Medigap plan is likely to need $158,000 to have a 50% chance of having enough money to pay for all of their medical expenses throughout retirement, according to a new analysis by the Employee Benefit Research Institute. Retired couples who want a 90% chance of being able to pay all their bills should aim to save $271,000.

These estimates have been revised significantly downward since 2009's calculation, largely due to recent health-care reform legislation that will eliminate the coverage gap in Medicare Part D by 2020. EBRI calculated that a 65-year-old couple in 2009 would need $210,000 to have a 50% chance of affording their retirement medical needs, $52,000 more than retirees will need once health care reform is fully implemented.

Nonetheless, it will still be a challenge for retirees to save enough to pay for all of their likely out-of-pocket costs. Single men with median drug expenditures would need $65,000 in savings to have a 50% chance of covering health care expenses throughout retirement, EBRI found. Women, who have longer life expectancies, would need $93,000. Both calculations are down significantly from $86,000 for men and $125,000 for women before health care reform was enacted. For a 90% chance of affording all their medical bills, a 65-year-old man and woman of the same age will need $124,000 and $152,000, respectively.

The EBRI analysis does not include the savings needed to cover long-term care expenses or early retirement prior to becoming eligible for Medicare at age 65. "Many individuals will need more money than the amounts cited in this report," says Dallas Salisbury, the CEO of the EBRI and a co-author of the report. "Many workers are generally unprepared for both health care expenses in retirement and retirement expenses."

Costs are likely to further increase for workers who plan to retire in 2020. EBRI estimates that men age 55 who plan to retire in 10 years should aim to tuck away between $111,000 and $354,000 in 2020 dollars for likely out-of-pocket medical costs. Women the same age are likely to need between $147,000 to $406,000.

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Most workers on the verge of retirement (62%) say they feel 'not at all confident' about being able to handle health care costs in retirement, according to a recent survey of 1,020 individuals between ages 50 and 64 conducted by the Society of Actuaries. To cope with expected increases in health care costs, the older workers surveyed say they plan to work on staying healthy (37%), cut back on current expenses so they can save more for the future (31%) and even delay retirement (25%).

This article was reported by Emily Brandon for U.S. News & World Report.