Medicare Costs Pose Rising Financial Burden on Older Adults

According to a Kaiser Family Foundation study, more than one-third of people with traditional Medicare spent at least 20 percent of their total income on out-of-pocket healthcare costs in 2013, and it is projected that number will increase to 42 percent by 2030. Out-of-pocket healthcare costs included premiums, deductibles and cost-sharing for Medicare-covered services, as well as spending on services not covered by Medicare such as dental and long-term care. The analysis does not include enrollees in Medicare Advantage plans, who account for 19 million of the 59 million people with Medicare.

The study found that while some people with Medicare face relatively low out-of-pocket costs, the financial burden can be especially large for beneficiaries with modest incomes and significant medical needs. For instance, among beneficiaries in traditional Medicare, just over half with incomes below $20,000 and those ages 85 and older spent at least 20 percent of their total income on health expenditures in 2013, along with more than four in 10 beneficiaries in fair or poor health status. Among all Medicare beneficiaries, out-of-pocket costs consumed 41 percent of beneficiaries’ per-person Social Security income in 2013, on average. Older women and beneficiaries ages 85 and older tended to have higher average out-of-pocket spending as a share of average Social Security income than others.