How Medical Bills Cut Into Retirees’ Income And How You Can Close The Gap

In a perfect world, Medicare would cover every possible medical expense in retirement. But most retirees don’t live in that world, so they have significant out-of-pocket (OOP) expenses.

According to a new study, “even with Medicare coverage and ignoring long term care, retirees face sizable out-of-pocket costs for premiums, copays, and uncovered services.”

“One way to gauge this burden is to look at how much these medical costs eat into their Social Security benefits and other income,” the study found. “After subtracting these costs, the typical retiree has only 75 percent of Social Security and 88 percent of total income left.”

“If health care costs continue to increase faster than incomes, these percentages will drop further.”

How do you close the gap? “Many enrollees buy supplemental insurance coverage – including Medicare Advantage, which can involve additional premiums. Finally, retirees without supplemental “Medigap” plans face the full cost of the many services not covered by Medicare, such as dental, vision, and hearing.”

Be careful, though, when picking a Medigap plan. There is a lot to know. Here is a good place to start.