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Color of Money: The trend for seniors' health care costs will make you sick to your stomach

Michelle Singletary on

WASHINGTON -- New analysis by the Kaiser Family Foundation has found that out-of-pocket heath care costs for Medicare beneficiaries are likely to take up half of their average Social Security income by 2030.

As many seniors already know, Medicare does not cover an increasing amount of expenses related to health care. Among these are supplemental insurance premiums, deductibles, long-term care and dental services.

Many Medicare recipients need to prepare for a big chunk of their income to be consumed by these out-of-pocket costs, according to Kaiser, a nonpartisan, nonprofit group that analyzes health care issues.

Kaiser wanted to build on a recent analysis by the Medicare Trustees. To quantify what people were spending on health care, the group examined out-of-pocket expenses relative to Social Security income and total income.

The report shows that Medicare coverage is already leaving a gap. And the chasm is especially pronounced for people in relatively poor health or with modest incomes.

The average Social Security income for all Medicare beneficiaries in 2013 was $13,375 (in 2016 dollars). The average total income was $35,317.

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Among beneficiaries in traditional Medicare in 2013, more than half of those over age 85 or with incomes below $20,000 spent at least 20 percent of their total income on health care expenses. Two-thirds of all Medicare beneficiaries are in traditional Medicare, while a third are in Medicare Advantage plans, such as HMOs and preferred-provider organization plans (PPOs).

"We were fairly stunned by the numbers," said Tricia Neuman, senior vice president and director of the Program on Medicare Policy at the Foundation.

Also in 2013, among all Medicare beneficiaries, average out-of-pocket health-related expenses consumed 41 percent of the average Social Security income, according to a report made available exclusively to The Washington Post.

"This is substantially higher than the share reported by the Medicare actuaries for the same year (23 percent) because it takes into account the full array of out-of-pocket health expenses that people on Medicare face," according to the report. The Medicare Trustees looked at the financial burden associated with Medicare Part B and Part D premiums and cost sharing, but not other health expenses."

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