From 2021 to 2022, the monthly premium for Medicare Part B increased from $148.50 to $170.10. The 14.5% increase is the largest price hike in the program’s history.
The Centers for Medicare and Medicaid Services touted a 5.9% increase in Social Security benefits as a way of off-setting higher Medicare premiums.
However, a new survey of 1,250 Medicare recipients by MedicarePlans.com shows that many seniors are feeling a financial strain, particularly in light of recent inflation. As a result, many seniors anticipate a difficult year ahead when it comes to paying for healthcare.
Key Findings
- 18% of Medicare recipients say affording healthcare expenses will be “very difficult” following the Medicare price increase, while 42% say it’ll be “somewhat difficult”
- 20% of Medicare recipients spend 50% or more of their monthly income on healthcare expenses
- For those facing difficulty paying healthcare expenses, half will likely have to forgo some type of medical care in 2022
- 27% of seniors who anticipate difficulty affording healthcare expenses may be forced to come out of retirement and get a job; 22% will consider continuing to work, despite retirement eligibility
Nearly 1 in 5 seniors say affording healthcare will be ‘very difficult’ in 2022
In light of the 2022 price increase for Medicare Part B premiums, 18% of Medicare recipients anticipate that it’ll be ‘very difficult’ to cover healthcare expenses this year. Another 42% say paying for healthcare will be ‘somewhat difficult.’
Increased Medicare premiums are hitting low-income seniors the hardest. Among respondents whose annual income is less than $50,000, 65% say it’ll be very or somewhat difficult to afford healthcare costs in 2022. This is compared to 58% of respondents who have an annual income of $50,000 to $99,999, and 51% of those whose annual income is $100,000 or more.
According to Senior Advisor Kelly Blackwell, a number of factors contributed to the price hike.
“Most years, we expect a Medicare price increase, but in 2021, that increase was limited by the CARES Act in response to the COVID-19 pandemic. Now, the Centers for Medicare and Medicaid Services is playing catch-up,” Blackwell says. “Healthcare costs are also rising. The higher premium is expected to fund Medicare spending and keep a reserve. Additionally, the uncertainty around Medicare coverage of some drugs, like the new Alzheimer’s drug Aduhelm, was another factor in the price increase.”
The Medicare Part B price increase also comes at a time when inflation is at a 40-year high, further straining seniors’ wallets. Eighty-two percent of survey respondents have made adjustments to their spending habits as a result of rising prices.
The majority, 51%, are reducing discretionary spending on things like travel and entertainment. However, 29% are also cutting back on necessities, including groceries and utility bills. Twenty-three percent of seniors are coping with inflation by dipping into savings, while 15% are trying to reduce their healthcare costs by skipping prescription medications or delaying medical procedures.
20% of seniors spend at least half of their monthly income on healthcare
Part of the difficulty likely stems from how much of their monthly income Medicare recipients are spending on healthcare.
Twenty percent of respondents say they spend roughly 50% or more of their monthly income on things like premiums, deductibles, and prescription drugs. Nearly one-third of Medicare recipients spend approximately 20% to 30% of their monthly income on healthcare.
For 26% of Medicare recipients, Medicare premiums are their biggest annual healthcare cost. Meanwhile, 20% say they spend the most annually on prescription drugs.
Two forms of healthcare that are not currently covered by Medicare, dental and vision, are the biggest healthcare costs for 18% and 10% of seniors, respectively.
Seniors anticipate forgoing care due to rising costs
Among the Medicare recipients who say it’ll be difficult to afford their healthcare costs, nearly half are predicting that they’ll have to skip some type of medical care this year.
Twenty-one percent of these respondents say it’s ‘very likely’ they’ll forgo medical care, while 28% say it’s ‘likely.’
Seniors are most likely to skip medical care that is not covered by Medicare, including dental care (41%) and vision care (34%). Twenty-nine percent will skip routine check-ups, while 26% will forgo outpatient procedures.
Difficulty affording healthcare has seniors considering working past retirement age
Medicare recipients who are facing challenges affording medical care this year are turning to a variety of solutions, although most of them are far from ideal.
Twenty-seven percent of those who anticipate difficulty paying for healthcare costs say they may have to come out of retirement and start working again. Meanwhile, 22% of those who haven’t retired yet say they will continue working, even though they are eligible for retirement.
The plurality of these respondents, 40%, will turn to savings to cover healthcare costs and other expenses. Sixteen percent are turning to children or other family members for financial assistance.
For seniors who are concerned about how they will afford healthcare this year, Blackwell has some advice.
“Educate yourself about coverage options and financial assistance that may be available to you by using free state and local resources,” she says. “If you have original Medicare, consider getting Medigap supplemental insurance to cover out-of-pocket expenses, or switching to a Medicare Advantage plan with a low premium and extra benefits such as dental and vision. Talk to your pharmacist about using discount prescription drug programs, or taking generic versions of your prescriptions.”
Methodology
All data found within this report derives from a survey commissioned by MedicarePlans.com and conducted online by survey platform Pollfish. In total, 1,250 American adults ages 65 and older who have health insurance through Medicare were surveyed. Appropriate respondents were found via Pollfish’s screening tools. This survey was conducted over a two-day span, starting on February 11, 2022 and ending February 12, 2022. All respondents were asked to answer all questions truthfully and to the best of their abilities. For full survey data, please email Content Marketing Specialist Kristen Scatton at [email protected].