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One third of Social Security benefits spent on Medicare costs

Written by

Diane Archer

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An October 2017 Center for Retirement Research paper looks at the amount retirees spend on health care out of pocket as compared with income. It finds that Medicare out-of-pocket costs are so high that retirement income for many is inadequate, threatening people’s retirement security. Typically retirees spend one third of their Social Security benefits on Medicare out-of-pocket costs.

Based on 2014 data, researchers found that, on average, retirees spend $4,274 a year out of pocket on medical and hospital care. Almost $3,000 is spent on premiums. Costs for long-term care are in addition to these costs. But, Michelle Andrews of Kaiser Health News reports that the researchers did not find a significant increase in average out-of-pocket spending when long-term care is factored in.

Researchers further found that about 20 percent of a typical retiree’s income goes to Medicare out-of-pocket costs. And, almost one in five of retirees (18 percent) were left with less than half of their Social Security checks after paying for Medicare costs. Six percent of them were left with less than half of their total income, including Social Security benefits.

That said, the researchers also found a $426 reduction in out-of-pocket spending in 2014 from 2004. In 2004, it averaged, $4,700. This drop is most likely attributable to the introduction of the Medicare Part D prescription drug benefit.

In short, we need to expand Social Security if we want to ensure retirees can make ends meet and keep them from falling into poverty. Their situation could get even worse by 2020, when Medicare spending is projected to increase.

If you want Congress to expand Social Security benefits, please sign this petition.

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Comments

2 responses to “One third of Social Security benefits spent on Medicare costs”

  1. BC Shelby Avatar
    BC Shelby

    …signed the petition and commented.

    Indeed with pensions in the private sector all but gone, people’s savings decimated by the recession, and stagnant low wages in many occupations today, that make it difficult to put anything away for retirement, Social Security is about the only thing left for people to depend on when they retire. It is bad enough that wages for the blue collar sector are not keeping pace with rising costs (particularly housing and healthcare), Social Security is even further behind the curve. 2% is almost meaningless when rents are in many cities rising upwards of five to seven times that figure. Even what is deemed “low income” housing can take 50% to 67% of one’s monthly benefit (I currently am paying about 52%). Add to that utilities, some form of communication (phone and Net service) and Medicare (another 138$ a month) and there isl little left for other necessities, like food and clothing.

    My SNAP benefits have been reduced by 35% based on what I am receiving in Social Security payments each month, making it more difficult to eat healthy. Natural and organic foods tend to cost more than the factory produced and grown rubbish (much of which has low nutritional value while being high in carbs, sugar, artificial ingredients, and in the case of meats/poultry, laced with antibiotics and growth hormones) that one finds at the local supermart. As a senior it is even more important to watch what one eats.

    SOcial Security was meant to allow seniors to retire in dignity. Instead today many are retiring into poverty and with cuts to programmes such as were approved last Thursday night, teh situation will only become worse.

    Reply
  2. Sheila King Avatar
    Sheila King

    I have a problem with my secondary insurance costing more than my primary, and I hardly ever use either one.

    Reply

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