For yearly healthcare costs (premiums and out of pocket max), they are part of the budget, as per the usual expenses. The OOPM is in an near liquid efund that gets rolled over year to year if not needed. If spent a new one is pulled from the stash and added to the efund for the next year.
For the FUTURE! we didn't set any extra part of the overall stach aside for those medical costs. We built our stash and plan to grow in perpetuity, so it has a few decades to grow and make that money.
And as Malcat pointed out, our principal is up for grabs for end of life stuff since it is our stash to spend :).
(So I voted for the lowest in the survey).
Loren
Also, if you put aside a substantial chunk for healthcare costs at the beginning of retirement, you end up with an avalanche of cash if you don't end expensively sick early on.
Now, I distunguish expensively sick from seriously sick, because a lot of illness isn't overly expensive. I'm very seriously ill in my 30s, and it isn't likely to kill me, but it also isn't likely to cost very much.
However, if you are insured, it's not the healthcare that's expensive when you are sick. It's the regular life stuff that can cost more. You might need help with cooking and cleaning, you can't just walk to places, travel may become very expensive because of needed accomodations, etc, etc.
Those aren't huge expenses though, and are usually manageable with some minor budget rejigging.
The big, big baddie is something that leaves you requiring long term nursing care: paralysis, early onset dementia, etc.
Otherwise, your most financially dangerous health risk is dental care. That can be thousands and thousands of dollars out of pocket year over year for people whose teeth aren't healthy and who don't say to end up with dentures. Ultimately there's a ceiling, but 50K+ out of pocket is not at all unusual.