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How Much Does Out-of-Pocket Medical Spending Eat Away at Retirement Income?

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  • Melissa McInerney
  • Matthew S. Rutledge
  • Sara Ellen King

Abstract

The adequacy of retirement income – from Social Security benefits and other sources – is substantially reduced by Medicare’s high out-of-pocket (OOP) costs. This project uses the 2002-2014 Health and Retirement Study to calculate post-OOP benefit ratios, defined as the share of either Social Security benefits or total income available for non-medical spending. The project decomposes the share of income that is going toward premium payments and services delivered and examines how these post-OOP benefit ratios differ by age, gender, income, supplemental insurance coverage, and health status. The project also updates previous studies’ estimates to document how OOP spending and the post-OOP income ratios changed following the introduction of Medicare Part D prescription drug coverage in 2006 and the closing of the “donut hole” coverage gap in 2010, which decreased OOP costs under Part D for those spending moderate amounts on prescriptions.

Suggested Citation

  • Melissa McInerney & Matthew S. Rutledge & Sara Ellen King, 2017. "How Much Does Out-of-Pocket Medical Spending Eat Away at Retirement Income?," Working Papers, Center for Retirement Research at Boston College wp2017-13, Center for Retirement Research.
    • Handle: RePEc:crr:crrwps:wp2017-13
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    File URL: http://crr.bc.edu/working-papers/how-much-does-out-of-pocket-medical-spending-eat-away-at-retirement-income/
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    Cited by:

    1. Melissa McInerney & Jennifer M. Mellor & Lindsay M. Sabik, 2021. "Welcome Mats and On‐Ramps for Older Adults: The Impact of the Affordable Care Act's Medicaid Expansions on Dual Enrollment in Medicare and Medicaid," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(1), pages 12-41, January.

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