Medical Expenses for Seniors Add Up
In the last few years, medical expenses have soared for everyone, senior citizens most of all. For senior citizens on a fixed income, the exorbitant price of health care has become a major issue.
By 2050, there will be 83.7 million people in the United States who are over the age of 65—nearly twice as many as there were in 2012. In fact, those who are 85 and older will be growing at a faster rate than the working age population by 2050. This could impact many different areas of the healthcare system beyond the most obvious, like Social Security.
Senior Medical Costs Skyrocket
Advancing age generally brings more health care issues. Although senior citizens only made up 15 percent of the United States population in 2016, that group accounted for 34 percent of healthcare-related spending. While the government pays for a significant portion (about 65 percent) of the medical costs for the elderly under the Medicare and Medicaid programs, seniors and their family members must pay out-of-pocket for the remainder. Consider the following statistics regarding medical expenses for seniors:
- Between the ages of 70 and 90, medical expenses for the elderly more than double.
- For an American in his or her 90's, the average amount spent on medical care is more than $25,000 per year, primarily for the cost of nursing home care.
- Poor Americans generally use more medical services and goods than the rich.
Misjudging the costs of medical expenses is a common factor in the total derailment of retirement plans and a drain on savings. A 2015 study concluded that healthcare spending for those over the age of 65 was approximately $18,500 per year. The average person cannot put $18,000 per year aside in anticipation of such expenses. Further, medical spending typically doubles between the ages of 70 and 90, making that number $36,000. In fact, those who have private insurance in addition to Medicare or Medicaid, or are paying for a supplemental Medigap insurance plan, are still responsible for co-pays, not to mention the monthly premiums. The elderly usually end up paying 20 percent out-of-pocket for medical expenses.
How Much Should Seniors Save to Cover Medical Expenses?
Research done in 2017 determined that senior couples would need to save $349,000 to take care of their health expenses after the age of 65. If you think that is a totally unattainable amount to have saved for your future health care expenses, you are not alone. Consider the following conclusions of this study:
- A man who has a "normal" amount of prescription drug and medical expenses has only a 50 percent chance of being able to pay those expenses if he has $72,000 put away specifically for healthcare.
- If that same man had healthcare and drug expenses in the 90th percentile, that number would increase to $97,000.
- A woman who has a "normal" amount of prescription drug and medical expenses would have only a 50 percent chance of covering those expenses if she had $93,000 put away specifically for healthcare costs. If she were in the 90th percentile, she would need $124,000.
Unless a couple is fairly well-off, these numbers are disheartening, to say the least. Experts say the best way to save enough to cover healthcare costs is to open and invest in a health savings account at a fairly young working age. Once you start drawing Medicare, you cannot continue to contribute to your HSA account. You can, however, withdraw money to pay for co-pays, deductibles, dental costs and Medicare premiums.
If these numbers alarmed you, it is important you speak to a knowledgeable financial planner who can help you determine the best way to save for your future medical expenses.
A Senior Living Community Can Help
If your loved one is in a senior care facility, administrators there can help you determine what resources are available for paying medical expenses. If you are looking for a senior care facility for your loved one, we can help. You can find the perfect senior living community near you on Senior Living Link. Our online assisted living community directory features facilities nationwide that offer an array of services, including health care programs, housekeeping, meals, medication administration, and more. Start your search today and contact Senior Living Link to learn more!