How Much Will Medicare Beneficiaries Spend On Healthcare Costs This Year?

According to TSCL’s 2021 study of typical retiree costs, the average Medicare recipient can expect to spend more than $1,000 per month on healthcare costs this year.  Considering that the average retiree benefit is just $1,550 per month, that doesn’t leave much wiggle room for everything else in a year of spiraling inflation.  Paying for food gasoline, or home and auto insurance is more challenging this year than it has been in 13 years.

TSCL’s estimate of average Medicare costs includes:

  • Premiums for Medicare Part B, as well as premiums for either a Medigap and Part D plan, or a Medicare Advantage plan.
  • Out-of-pocket costs for deductibles, co-pays and co-insurance.
  • Costs not covered by Medicare such as dental, vision and audio care.

Even so, our estimate is still not complete.  It does not factor in the cost of long term care services, and, because it is an average, it may not match every household’s situation.

A $1,000 per month budget for medical expenses is a staggering amount to consider.  Retirees with the highest costs are not only those with multiple health conditions, but also frequently those who don’t have access to employer – provided health insurance benefits.  This group also includes those who don’t have access to competitively priced Medicare Advantage Plans, and therefore pay higher premium costs for Medigap and Part D plans.

Over the past year, some of the most difficult emails that TSCL received came from those of you who describe wrenching situations caused in large part by high healthcare costs and emergency needs that arose during the COVID-19 pandemic and the weather-related disasters of 2020.  That has sometimes included taking in adult children and your grandchildren, and often providing financial assistance from your own savings.

These actions are what families do, but they are not without long term costs to retirement security.  Some of you have reported going into debt, most often due to high medical costs.  In fact, a Gallup poll in July of 2020 found that 15% of the adults contacted reported at least one person in their household had medical debt that will not be repaid either in full or in part within the next 12 months.

The stakes are high for retirees, who want Congressional action.  Eighty eight percent of those of you who took our 2021 Senior Survey want Congress to reduce prescription drug costs by allowing Medicare to negotiate prices. Congressional inaction would cost all of us dearly, if lawmakers fail to take action to boost Social Security benefits and enact reforms that would strengthen Social Security’s financing for decades to come.

What financial actions have you been forced to take over the past 12 months?  Please take TSCL’s new Retirement Survey and let us know!