Despite Medicare, Medical Expenses Bite

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Medicare pays for the bulk of the medical care for Americans over 65, but a lot of their income is still eaten up by medical expenses.

The list of expenses is long. The lion’s share goes toward various insurance premiums – for Medicare Part B coverage, Part D prescription drug coverage, and supplemental insurance, whether Medigap, a Medicare Advantage plan, or employer health insurance for retirees. The remaining costs, for copayments and deductibles, are also significant.

These out-of-pocket costs, when added together, averaged about $4,300 annually per person, finds a new study by researchers Melissa McInerney, Matthew Rutledge, and Sara Ellen King of the Center for Retirement Research.

Out-of-pocket costs consume a third of the amount that retirees receive from Social Security, which is the most significant source of retirement income for a wide swath of the nation’s seniors, including many people in the middle-class. Half of seniors get at least half of all their income from the federal program.

The Medicare Part D prescription drug program has given some relief to retirees. After it became effective in 2006, the share of seniors’ income consumed by out-of-pocket costs declined slightly and then declined again after a follow-up reform of Part D began to close a big gap in drug coverage – known as the donut hole – in 2010.

Despite this positive trend, the new study’s comprehensive look at medical costs provides more evidence of the financial pressures seniors are under to pay their share of healthcare costs.

Unfortunately, the future doesn’t look any brighter. Unless the growth in medical costs moderates, they will continue to be squeezed by healthcare and will find it more difficult to make ends meet.

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

Retired and loving it, Don

As a newly retired former federal employee, oh how I wish I would have known and appreciated the benefits of a High Deductible Healthcare Plan (HDHP) coupled with a Health Savings Account (HSA)! Managed to get 8-9 years in a plan before retirement, but would have liked to have been in since 2003, the inception of HSAs.

Everyone please consider enrolling in a HDHP if your employer offers one!


We used to pay almost $200/mo for Part D prescription coverage. Plus we had to pay for the drugs.

Our daughter-in-law owns her own pharmacy. She told us that HER cost for a 90 day supply for ALL of my wife’s and myself pills, etc. cost her $14.00! Read that again— $14.00 for our 90/day supply! She said we should drop Part D (which we did). Our provider screamed “ouch” and told us we couldn’t drop the coverage because we had to wait until the fall enrollment period to do so. I said I am not paying the bill when it comes so forget it. They went away after 60 days. And we are $2,400/year richer.

We pay our DIL $50/month to cover her expenses. She smiles. Why not talk to YOUR local pharmacist and see what you can negotiate.

BTW, if we ever need the REALLY expensive meds she said we can work that out and if needed we can go back on coverage during fall enrollment time. It’s worth the effort to talk to your pharmacist.

    Christopher Glueck

    Sadly, not everyone has a child who is a pharmacist and I expect many pharmacist will not reduce that low, but worth a try. On another note, you may wish to look at anything offered from your state that is considered “Creditable Coverage” for drugs. We pay $30 each per year in Wisconsin for SeniorCare. Ours is too high for any benefit directly; however, if we ever need to have a Rx plan, we can sign up without penalty. If one is NOT covered, one will pay a significant penalty for every month or year of not having creditable coverage when applying for Part D. Same for Part B.

    Dave G.

    I get your thinking but don’t recommend it. Some generics run $300 per month. Anything advertised on TV can be even more expensive. For example, retail for a 30-day supply of Enbrel is about $5,000. Nobody can buy that drug for $14.00.

    Instead, you can enroll in a “place holder” Part D plan for minimal cost in most areas. In my state, I picked EnvisionRxPlus for just $12.60 per mo. It still must cover at least two drugs of every therapeutic type under Medicare rules. No reason for anyone to get penny wise and pound foolish at those rates.

Thomas Lanphier

Hello good people. I pay $30 for my Part D through SilverScript and in many ways, this inexpensive plan will offer lower out-of-pocket costs for many drugs. Plan pays the annual deductible of over $400 as well.

Judy Molnar

Check out It’s free. Our Rx drugs are all tier 1 except my maintenance inhaler, and my Medicare policy won’t cover that. I pay less by not going through the insurance and using GoodRx. You can upload your drug list at the website and see the difference. GoodRx also compares prices at all the local pharmacies for you, which can make another whopping difference. God bless my doctor for steering us to GoodRx!

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