October 27, 2022

A Start on Estimating Retiree Medical Costs

New Medicare enrollees can expect their uncertain medical expenses to take roughly $67,000 out of the household budget, on average, over the rest of their lives.

Since this estimate is only an average, some retirees will pay less and some will pay much more. And the estimate, revealed in a new brief by Karolos Arapakis at the Center for Retirement Research and based on a larger study, includes only the copayments and cost-sharing charges paid by retired households over 65. It excludes their single largest medical expense – monthly insurance premiums.

The estimate is, nevertheless, a useful benchmark for older workers and retirees who want to get a better handle on their health care spending, which is very difficult to plan for. The study takes into account the unexpected cost of things like a broken arm, as well as the cost of managing chronic medical conditions, which accumulate over the years.

To estimate total medical costs, the researchers linked a periodic survey of retirees that includes out-of-pocket spending to their Medicare insurance records – for Parts A, B and D, and Medicaid  – and to a separate data source that tracks private insurance policies such as Medicare Advantage plans and other smaller public and private sources.

The various government and private insurers pay around 78 percent of older households’ total lifetime health care costs, excluding premiums, the researchers found. The retirees pay the remaining 22 percent, or about $67,300 for an older household with average spending for medical care.

However, retirees with the most serious medical problems will spend two times more out-of-pocket during their lives, and relatively healthy people will pay less. …Learn More

September 29, 2022

Healthcare’s Big Bite Out of Retiree Budgets

This year, retirees were jolted by the 14.5 percent hike in Medicare’s Part B premium for medical services. It was the second-largest percentage increase in at least 20 years.

The monthly premium, which rose to $170, will drop to $165 in 2023. But medical care is an expensive proposition that consumes a big chunk of many retirees’ income from Social Security, 401(k)s, and other sources.

According to a new analysis of 2018 health care data, typical retirees had 88 percent of their total income left to buy everything else after paying for medical care. And one in 10 retirees with inordinately large health care costs had 63 percent or less left over for living expenses, said Melissa McInerney, Matthew Rutledge, and Sara Ellen King in their study for the Center for Retirement Research.

Interestingly, Medicare does protect against the larger cost burdens that follow health declines. As retirees age or develop chronic physical or medical conditions, the researchers found, the share of income consumed by medical costs doesn’t change very much.

Medicare covers virtually all retirees, and the lion’s share of their out-of-pocket medical expenses are premiums – for Part B, Part D drug coverage, Medigap, or Medicare Advantage insurance plans. The other medical expenses included in this study were cost-sharing and copayments for basic Medicare, prescription drugs, eyeglasses, hearing aids, and visits to the doctor, dentist, and hospital. Long-term care costs were excluded.

The analysis was restricted to people who have signed up for both Medicare and Social Security.

Paying for care puts the most strain on low-income Americans, many of whom rely almost exclusively on Social Security and have few, if any, other income sources. The exception is people with such low incomes that they qualify for Medicaid; they pay only 4 percent of their income for health care. …Learn More

June 28, 2022

Limiting Medical Debt: a 50-State Ranking

Lawmakers in Maryland, California and Maine have made the most effort to prevent residents from drowning in medical debt. Texas, South Carolina and Tennessee do the least.

This is the assessment of an organization known as Innovation for Justice, a team of researchers at the University of Arizona and the University of Utah. They ranked the 50 states on whether they have taken myriad steps to minimize medical debt. These legislative measures range from restrictions on the healthcare industry’s billing and collection practices to how debt claims are handled in the courts.

Medical debt is the single largest category of consumer debt, and the Kaiser Family Foundation estimates that 100 million Americans are behind on paying their medical or dental expenses – and a quarter of them owe more then $5,000.

This project would be important at any time and is even more so during a pandemic when many people have incurred medical debt for COVID. Some of that debt is even for bills the federal government would’ve paid on behalf of the uninsured cashiers, drivers, retail workers, restaurant servers and cooks who were on the front lines in the worst days of the pandemic.

Putting the state rankings into a national perspective, the consumer protections to prevent the accumulation of debt are not exactly impressive. Only three of the 50 states qualify as having good protections. The researchers ranked another 27 states as weak and 20 as poor.

Maryland, which sits at the top of the medical debt scorecard, satisfies most of the researchers’ criteria for debt reduction. State lawmakers have limited residents’ debt by mandating that patients be screened for health insurance or government health benefits. The state also regulates hospital billing practices, instructing them to offer a payment plan before sending a patient’s bill to collections and requiring that bills itemize every charge, every payment, and whether charity care has been provided to the patient.

Last but not least, Maryland expanded its Medicaid program, as encouraged by the Affordable Care Act, to extend subsidized or free health insurance to more of its low-income workers. Medical debt has been reduced in the states that expanded their coverage. The lowest-ranked states – Texas, South Carolina and Tennessee – are among the states that have not expanded Medicaid.

Visit the medical debt scorecard to see what your state is – or isn’t – doing. …Learn More

May 5, 2022

Use of Medicare Subsidy Low in Some States

A major government program helps poor and low-income retirees and adults with disabilities defray what can be substantial healthcare expenses that aren’t covered by Medicare. But enrollment is unusually low in some states because of more stringent eligibility standards.

The Medicare Savings Programs, which are administered by the states and funded by the federal government, subsidize Medicare’s Part A and Part B premiums and cost-sharing obligations for more than 10 million Medicare beneficiaries.

But participation varies widely from state to state, according to a new report by the Kaiser Family Foundation, due to a combination of differences in need and varying eligibility standards.

No more than 10 percent of the retirees in Nebraska, New Hampshire, North Dakota, Utah, and Wyoming are enrolled in their state programs. The enrollment rates are double or even triple that – from 20 percent to 26 percent – in Alabama, California, Connecticut, the District of Columbia, Louisiana, Maine, Massachusetts, and Mississippi.

A major reason for the disparities in enrollment is the difference in the dollar value of assets retirees in each state are permitted to have and still qualify. The federal government set the dollar values on the stocks, bonds, and other assets of Medicare beneficiaries at $8,400 for single and widowed retirees and $12,600 for couples in 2022. The house and one car do not count.

But several states have chosen to make it easier to qualify by setting asset limits that exceed these federal minimums. In fact, eight of the nine states and the District of Columbia that have the highest shares of retirees in their programs either set asset limits above the federal standard or don’t have an asset test at all.

These states still restrict participation to disadvantaged people by placing income caps on eligibility, which range from about $13,000 to $26,000 per year in all but one state. But in several states that only match the low federal minimums for assets, disadvantaged retirees aren’t getting the financial assistance they need to access medical care.

Meredith Freed, a senior Medicare policy analyst for Kaiser, said that between a third to half of retirees with incomes below 135 percent of the federal poverty limit nationwide are not enrolled.

Medicare beneficiaries spend an average $6,000 per year out of their own pockets for medical care. “Having help with premium and cost-sharing is incredibly important,” Freed said. …Learn More