Q: How much does the average Medicare recipient pay out of pocket for medical expenses?
A: According to a Kaiser Family Foundation study published in 2014, the average Medicare beneficiary paid $4,734 in 2010, including premiums and out-of-pocket costs (up from $4,241 in 2006). This figure includes inpatient long-term care services, but not in-home long-term care services (in general, long-term care is not covered by Medicare regardless of whether it’s in the home or in a facility. In either case it would be out-of-pocket costs).
Of the total, 42 percent ($1,989) was premiums, including Medicare Part B premiums and supplemental coverage (Medigap and Medicare Part D). The remaining 58 percent ($2,744) was out-of-pocket spending for medical and long-term care services. The biggest single chunk of the out-of-pocket spending was for long-term care facilities, which is not surprising given that Medicare generally doesn’t cover long-term care.
The Kaiser Family Foundation study did not include Medicare Advantage enrollees, who accounted for about 22 percent of the Medicare population in 2010. (That percentage increased to 30 percent by 2014, and to 31 percent by 2016).
How has spending changed since 2010?
It’s likely that total enrollee spending on Medicare has increased since the Kaiser Family Foundation analysis was conducted, as premiums, deductibles, and coinsurance have increased. But for seniors with significant prescription needs who find themselves 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.
In 2017, the Part B premium is increasing by 10 percent or about 4 percent, depending on a variety of factors that vary from one enrollee to another. Most Part B enrollees — roughly 70 percent — will see premium increases of about 4 percent.
The Part B deductible is also increasing by about 10 percent, for all enrollees. It was $166 in 2016, and has increased to $183 for 2017. The Part A deductible and coinsurance will also increase slightly in 2017, as will 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 by enrollee
While the average Medicare enrollee spent $2,744 in 2010 in out-of-pocket costs excluding premiums, there’s considerable variation based on age. Beneficiaries who were 85 or older spent an average of $5,962 (plus premiums), while those age 65 to 74 spent $1,926 (plus premiums).
There are also differences based on gender. Women had slightly higher total average costs than men, and that difference grows with age, 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 2010, Medicare enrollees who reported being in poor health had average out-of-pocket costs of $4,505 (plus premiums), while those who reported being in excellent health had average out-of-pocket costs of $1,774 (plus premiums).