Financially Burdened Seniors Struggle to Cover Healthcare Costs

Healthcare costs continue to be a barrier for seniors, with over one in four older Americans facing high out-of-pocket costs and lacking emergency funds to pay for healthcare services, according to a MedicareGuide.com survey. 

MedicareGuide.com gathered insights about healthcare spending from 1,176 Americans ages 65 and older, across a four-day period in September 2021.

The survey found that 27 percent of seniors had less than $500 in emergency savings to pay for medical bills. Nearly 20 percent of respondents reported having no savings for medical bills.

More than one in four seniors (28 percent) said they would take from retirement or non-retirement funds to pay for a major healthcare issue, while 22 percent would use a credit card. Only two percent of respondents said they had a health savings account to assist with healthcare costs.

Perhaps as a result of a lack of savings, seniors on Medicare have delayed receiving healthcare. More than a quarter (26 percent) of older Americans responded that they have deferred dental, hearing, or vision care in the past year.

Seniors have also changed behaviors to be able to afford healthcare services. More than half (65 percent) took steps to try to reduce their prescription drug spending, including 24 percent who sought generic versions instead of brand name drugs and 18 percent who asked for larger supplies of prescriptions.

Nearly 30 percent of older Americans reported postponing other expenses like travel and home repair to pay for healthcare services, the survey noted.

High out-of-pocket healthcare costs have contributed to senior healthcare struggles. In the past year, over a third of seniors spent more than $1,000 on out-of-pocket healthcare services, including dental, vision, hearing, and prescription drug services.

Additionally, long-term care, healthcare insurance, and dental services yielded the highest costs for seniors, according to the survey results.

Just over three in ten seniors reported receiving surprise medical bills in the past year, another factor that may contribute to financial barriers. The surprise bills were over $500 for 18 percent of respondents.

High healthcare costs can harm the mental and emotional wellbeing of older Americans struggling to afford care, the study revealed. Many seniors have a history of financial healthcare concerns by the time that they turn 65 and become eligible for Medicare.

Sixty-seven percent of seniors said they were somewhat or very concerned about healthcare costs. Almost half of respondents said they were worried that a medical occurrence could lead to debt or bankruptcy.

More than a third of older Americans reported that it was somewhat or very difficult to pay for healthcare between the ages 60 and 65.

Jeff Smedsrud, cofounder of MedicareGuide’s parent company HealthCare.com, encouraged seniors to choose the Medicare or Medicare Advantage plan that best coincides with their financial situations during the annual enrollment period.

“Cash-strapped seniors may be eligible for plans that offer better savings and coverage than their current plan,” Smedsrud said in the press release.

Medicare plans have been shown to produce distinct healthcare cost patterns depending on the combination a member chooses.

Traditional Medicare beneficiaries who had Medicare supplemental coverage experienced fewer healthcare spending problems compared to Medicare Advantage beneficiaries and traditional Medicare beneficiaries without supplemental coverage, according to a past Kaiser Family Foundation (KFF) issue brief.

Supplemental coverage, such as Medigap plans or Medicaid, may cover deductibles and cost-sharing requirements for seniors, which could ease their financial burden.

Another KFF brief found that Medicare Advantage spending topped traditional Medicare spending, likely due to the supplemental benefits that accompany Medicare Advantage plans. However, some seniors have experienced lower healthcare costs through Medicare Advantage plans due to their out-of-pocket healthcare spending limits.