Posted on 03/31/2017 by Allen Heffler
Medical Costs Projected to Continue to Increase for Seniors- Allen Heffler
Medicare provides extremely important medical coverage for older adults. A recent study indicates that, even with Medicare, medical costs for seniors are likely to rise significantly.
By 2035, a typical older adult will spend one out of every seven dollars of retirement income on medical care. This is a whoppng 40% increase just from the year 2012. The study is out of Harvard Medical School and The Urban Institute.
Keep in mind that the study refers to the cost of medical care only. This does not refer to the need for Long Term Care, which it is estimated that over half of all Americans will need before they die. And many of those that do need this care will require significant levels of assistance, which will be quite expensive
The results of their health cost projections are scary, especially as elected officials debate whether to restructuring Medicare in ways that would require seniors to pay an even greater share of their medical costs than current law.
Even without those changes, older adults are confronting a long list of troubling trends. For many, overall health costs are growing faster than their incomes. And employers are scaling back or eliminating retiree health benefits.
What will these and other changes mean for those 65 and older? By 2035, median out-of-pocket spending for medical care—both insurance premiums and direct costs such as co-pays and deductibles—will rise from 10 percent of income to 14 percent (Remember: median means that half will pay more and half will pay less). But there will be big differences depending on a senior’s income and medical needs.
For example, the very poorest will continue to pay almost nothing out-of-pocket, thanks to Medicaid. Still, among the lowest-income one-fifth of older households (who among all households made an average of about $22,800 in 2015), median health spending will rise from 5 percent of their income to 25 percent. The sickest will pay half of their income on medical care.
Among those seniors in the group of all households that made an average of about $43,500 in 2015 median spending will grow from 21 percent of income to 26 percent. Out-of-pocket costs for those in poor health will rise from 23 percent to 29 percent.
By contrast, the highest income 20 percent of older adults—a group in the overall population that made $117,000 or more in 2015—will pay about 5 percent of their income for health care in 2035, roughly the same share they do today.
Rising out-of-pocket costs will be a particular problem for those with chronic medical conditions and persistent high expenses. The study found that in 2014, about one-third of older adults paid at least 20 percent of their income for medical care for a period of five years (in any given year, and the two years before and after that year). By 2035, 44 percent will spend a fifth of their income on health costs for five years in a row. Scary stuff!
If you have any questions concerning your Medicare options today, Allen Heffler at MyMedicareAdvisor can help. Just call 215-658-1776. We Make Your Medicare Decision Easy.