Q: How much does the average Medicare recipient pay out of pocket for medical coverage and expenses?
A: According to a Kaiser Family Foundation study published in 2018, the average Medicare beneficiary paid $5,503 in 2013, including premiums and out-of-pocket costs for covered care, as well as out-of-pocket costs for things like dental care and long-term care, which are not covered by Medicare. This amounted to 41 percent of the average per capita Social Security income — and that’s expected to increase to 50 percent by 2030.
The Kaiser Family Foundation study included both Original Medicare and Medicare Advantage enrollees. 28 percent of all Medicare beneficiaries were enrolled in Medicare Advantage plans as of 2013.
How has spending changed since 2013?
It’s likely that total enrollee spending on Medicare has increased since 2013, as premiums, deductibles, and coinsurance have increased. But for seniors who end up in the Medicare Part D donut hole, total out-of-pocket spending may have decreased, as the Affordable Care Act has been gradually closing the Part D donut hole. But average prices for prescription drugs — and thus, the total amount that people pay in coinsurance, which is a percentage of the cost — have increased since 2013, so people who don’t end up in the donut hole may be paying more for their Part D prescriptions than they were several years ago.
In 2018, the standard Part B premium is $134/month, although most enrollees are paying about $130/month. In 2013, Part B premiums were $104.90/month.
The Part B deductible is $183 in 2018. That’s the same as it was in 2017, but it was only $147 in 2013. The Part A deductible and coinsurance also increased slightly in 2018, as did the premium for Part A that applies to people who don’t have enough work history (or a spouse with enough work history) to qualify for premium-free Medicare Part A.
Average spending varies based on age, gender, and health status
While the average Medicare enrollee spent 41 percent of per-capita Social Security income on health coverage and out-of-pocket costs in 2013, there’s considerable variation based on age. Beneficiaries who were 85 or older spent an average of 74 percent of per-capita Social Security income on health coverage and costs. This is due in large part to the fact that older seniors tend to have more extensive health care needs, and are more likely to need long-term care, which is not covered by Medicare and is thus an out-of-pocket expense (Medicaid does cover long-term care for those who exhaust their assets, and some seniors have private long-term care insurance).
There are also differences based on gender. Female Medicare beneficiaries spent a slightly higher average chunk of per-capita Social Security income on health coverage and out-of-pocket costs than their male counterparts, with the exception of those under age 65 (who are on Medicare due to a disability). The overall higher spending as a percentage of per-capita Social Security income increases, mainly because of longer life expectancies for women, and the associated higher long-term care facility costs.
And unsurprisingly, those in poorer health have higher out-of-pocket spending since they need more medical treatment during the year. In 2013, Medicare enrollees who reported being in poor health spent an average of $6,128 in premiums and out-of-pocket health costs, while those who reported being in excellent or good health had average out-of-pocket costs of $5,246.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.