People with Medicare spend twice as much on healthcare as other people, according to a new Kaiser Family Foundation report. On average, people with Medicare spend $7,000 a year or 13.6 percent of their total household spending a year. People under 65 spend about 6.5 percent of their income or $4,900 a year.
Higher spending for Medicare population is not surprising. People with Medicare on average have lower incomes than younger working people. Annual average household income for working people is $74,100 as compared with $51,800 for people with Medicare. And, of course, people with Medicare use significantly more health care services than younger working people.
These healthcare expenses for people with Medicare represent a bigger portion of their income than health care expenses for younger working people. What’s noteworthy is that as a share of total household spending, people with Medicare’s health care expenses are about the same in 2022 as they were in 2013.
The Inflation Reduction Act could lower people with Medicare’s out-of-pocket healthcare costs somewhat. It caps prescription drug costs under Medicare Part D at $2,000 a year for covered drugs, beginning in 2025. And, it brings down the costs of some high-cost drugs beginning in 2026. It will also be easier for people to qualify for extra help paying their prescription drug costs as Congress has expanded access to these subsidies.
People with Medicare still need to buy supplemental coverage to fill gaps in traditional Medicare unless they have Medicaid or subsidized employer retiree coverage. If they are in a Medicare Advantage plan, they can pay as much as $8,700 a year in out-of-pocket costs for in-network care alone, though on average Medicare Advantage plans cap their costs at around $5,000 a year for in-network services (about twice the cost of Medicare supplemental coverage.)
Here’s more from Just Care:
- Poll: Health care costs are a top economic priority for voters
- 2024: How much should you save to cover health care costs in retirement?
- Debt among older Americans increasing in good part because of health care costs
- Costs in Medicare Advantage present barrier to care
- Five concerning policy outcomes of Medicare Advantage program
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