Health Costs Will Consume Half of Social Security Income By 2030

Health costs are projected to consume about half of social security income by the year 2030, according to a recent report by the Kaiser Family Foundation.

health costs

 

Health Costs: Going Up, Up, Up

The costs are a substantial and growing burden for many people on Medicare and is projected to consume a larger share of total income by 2030.

The study, finds that more one-third of people with traditional Medicare spent at least 20 percent of their total income on out-of-pocket health care costs in 2013. This includes premiums, deductibles and cost sharing for Medicare-covered services. It also covers spending on services not covered by Medicare, such as dental and long-term care. Income is measured on a per person basis, which for married couples is income for the couple divided in half.

 

Health Costs: The Breakdown

While some people with Medicare face relatively low out-of-pocket costs, the financial burden is large for beneficiaries with modest incomes and significant medical needs. For instance, among beneficiaries in traditional Medicare, those with incomes below $20,000 and those aged 85+ spent at least 20 percent of their total income on health expenditures in 2013. More than 4 in 10 beneficiaries were in fair or poor health status.

 

health costs
 

Health Costs: Medicare Beneficiaries

Among all Medicare beneficiaries, out-of-pocket costs consumed 41 percent per person’s Social Security income in 2013. Beneficiaries aged 85 and older tended to have higher average out-of-pocket spending as a share of Social Security income.

The analysis projects that the health care spending burden among Medicare beneficiaries will rise over time. By 2030, the study projects that under current policies 42 percent of people with traditional Medicare will spend 20 percent of their total income on health care.  Among all people with Medicare, out-of-pocket costs are projected to consume half of the average per person Social Security benefit by 2030.

With rising health care costs representing a growing challenge to the financial security of seniors, innovative thinking will be necessary.

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