$250,000 average medical bills in retirement

[dallas27]

Every so often I see these articles claiming that the AVERAGE retire will face a 1/4 million in medical bills before death. It's smells awful "sensationalized" to me.

If that's really the average, then I would imagine there should be a heck of a lot of anecdotes from the members of this forum, be it spouses or parents, who incurred such bills.

Mind you, these are bills AFTER insurance.

Can I ask my fellow forum members to share briefly their experience for cumulative bills that they have knowledge of?

[M Paquette]

It sounds reasonable to me. Our non-insurance medical expenses have run from 7,000 to 22,000 USD a year, so 250,000 over 20 years, particularly with more problems appearing with greater age, would seem to be a reasonable guess for an aging couple.

Add in the spike in expenses many see in the last 6 months of life, and it could even be a reasonable guess for a single person.

It's one of those 'one size tries to fit all' numbers, though. I can also see someone getting through 20 years of retirement with 50,000 in non-insurance medical expenses, or 500,000. As always, your mileage may vary.

[meierlde]

Quote:

Originally Posted by dallas27 Every so often I see these articles claiming that the AVERAGE retire will face a 1/4 million in medical bills before death. It's smells awful "sensationalized" to me. If that's really the average, then I would imagine there should be a heck of a lot of anecdotes from the members of this forum, be it spouses or parents, who incurred such bills. Mind you, these are bills AFTER insurance. Can I ask my fellow forum members to share briefly their experience for cumulative bills that they have knowledge of?

Is that the average or the median amount. Does that include LTC? If LTC is included then 4-5 years of nursing home care could run up the amount.
Anyway the median would be a more meaningful number as 1/2 pay less and 1/2 pay more. The average is troubled by a few folks that are in and out of hospitals with maximum medical effort being expended.

[Lakewood90712]

I don't think it out of line. My Dad retired at 72 and died at 87. I estimate between Medicare and supp. private insurance, his medical bills were well over a half a million. At least half was spent in the last 5 years of life .

He was basically DOA at the ER, so no 6 figure hospital bill for end of life.

That is not counting assisted living / Dementia care (about $90k/yr) .

No Big illnesses like cancer or heart bypass, just a lot of recurring acute problems.

"The average is troubled by a few folks that are in and out of hospitals with maximum medical effort being expended." Yea , big time.

[dallas27]

The articles i read usually state AVERAGE and AFTER insurance. Out of pocket.


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[Bestwifeever]

Quote:

Originally Posted by dallas27 The articles i read usually state AVERAGE and AFTER insurance. Out of pocket. Sent from my iPhone using Early Retirement Forum

Links?

[Meadbh]

I don't think that's at all unreasonable. In fact I think it might be an underestimate for the US.

Below is a recent Canadian analysis by CIHI, the Canadian Institute for Health Information:

http://www.cihi.ca/CIHI-ext-portal/p...ECUTIVE_SUM_EN

While Canadians age 65 and over account for less than 15% of the Canadian population, they consume more than 45% of all public-sector health care dollars spent by the provinces and territories. However, seniors are a diverse group. In 2012, the latest available year for data broken down by age group, per person spending for seniors increased with age: $6,368 for those age 65 to 69; $8,545 for those 70 to 74; $11,692 for those 75 to 79; and $21,054 for those 80 and older.

The average lifespan is 82. Let's assume that is the age of death.

Age 65-69: $6368 x 5 = $31,840
Age 70-74: $8545 x 5 = $42,725
Age 75-79: $11,692 x 5 = $58,460
Age 80+: $21,054 x 3 = $63,162

Total = $196,187

Note that average per capita health expenditures in the US are approximately double those in Canada (data presented in the article).

[bad_LNIP]

Every so often I see these articles claiming that the AVERAGE retire will face a 1/4 million in medical bills before death. It's smells awful "sensationalized" to me.

I don't know how sensationalized it is. Get cancer and you'll probably be thrilled to only pay 250k. I know of a guy who was a night janitor for Wal-mart and worked for Nissan I think as a manager, retired, was fine until he broke his hip, it cleaned him out financially, and now he works night shift to make ends meet in "retirement"

I haven't had an in depth analysis of their finances, insurance, and such, but I do know that getting the wrong illness can be crippling financially and is one of the top reasons for personal bankruptcy.

That said, there is an alternative: medical tourism. Paying cash in Malaysia or Costa Rica is cheaper including food, room, board, and travel.

[Meadbh]

Medical tourism may be useful for once off treatments, such as surgical procedures, but it doesn't help when the treatment you need has to be administered daily or several times per week. Dialysis is one example.

[W2R]

Quote:

Originally Posted by dallas27 Every so often I see these articles claiming that the AVERAGE retire will face a 1/4 million in medical bills before death. It's smells awful "sensationalized" to me. If that's really the average, then I would imagine there should be a heck of a lot of anecdotes from the members of this forum, be it spouses or parents, who incurred such bills. Mind you, these are bills AFTER insurance. Can I ask my fellow forum members to share briefly their experience for cumulative bills that they have knowledge of?

My bills after excellent insurance and, recently, Medicare as well, have ranged from $1000-$5000 per year. I am in my 60's, healthy, and with zero dental/optical coverage so all dental/optical expenses are included in this $1000-$5000. I am not including all the money I spend trying to lose weight, gym fees, and so on which I feel are necessary in order to remain healthy.

On the other hand, think about the older folks! People in their 80's and 90's are so much more likely to have serious, expensive conditions than people in their 50's and 60's. As others have pointed out, the astronomically high expenses of a few can really skew an average. It would probably be lots more useful to look at medians for different age categories.

[pb4uski]

Quote:

Originally Posted by dallas27 ....Can I ask my fellow forum members to share briefly their experience for cumulative bills that they have knowledge of?

While I understand the "logic" of posters comments, these numbers seem sensationalized to me based on my personal experience as an early retiree and my knowledge of my Mom's costs and grandmother and great aunt's costs (I paid the bills). That said, we are/were all relatively healthy.

Our costs are minimal, $2,500 to $3,000 each year from 2010 to 2013 and only about $500 so far this year (for two relatively healthy late 50s people). Mom is early 80s and on Medicare and has a good supplemental insurance plan so her costs are minimal as well. Same with Dad when he was alive. Ditto with aunts and uncles who are in their late 70s/early 80s and on Medicare. Grandmother and great aunt were in their 90s and also on Medicare and had a good supplemental plans so their out of pocket costs were next to nothing - just Rx copays.

My HDHI plan has a $6,250 deductible and no-copays. So in theory if all my care was in-network, the most I would pay is $6,250 per year so times 25 years would be $150k. But, it is unlikely that I would max out my deductible every year and more importantly, my expected medical costs are in my living expenses so the funding for medical expenses is built-in to my retirement savings and retirement income.

Overall, compared to my experience, it seems like scare tactics. I suspect that the average is high because the distribution of costs is a skewed distribution with a lot of people with low costs and a few maxing out of pockets consistently and that makes the mean seem really high, but that is just a guess on my part based on my experience and what I have seen while paying the medical bills of a number of relatively healthy elderly relatives.

[MichaelB]

The $250k cost of health care for retirees is from Fidelity, they publish an annual survey on this. Here's a link to the 2014 update https://www.fidelity.com/viewpoints/...hen-you-retire
One footnote on methodology

Quote:

1. The Fidelity Retiree Health Care Costs Estimate assumes that individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, Medicare. The calculation takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services, and long-term care. The estimate assumes no employer-provided retiree health care coverage, and life expectancies of 17 years for men and 20 years for women.

They do not share (or I cannot find) the raw survey data or specifics on how the total cost is broken down. It seems excessive when compared with median household incomes.

[Ally]

My mom had Alzheimer's and if you include her paid caregivers, her total unpaid cost was over $350,000, mostly related to that disease. My Dad's cost was less with cancer, but he still required caregivers for the end of his life.

I don't know yet if our costs will be that high, but if I get Alzheimer's, it will be. My husband was eligible for long term care insurance, but I am not.


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[daylatedollarshort]

Any numbers from Fidelity have to be taken with a grain of salt because they have a vested interest in keeping people working and adding, not withdrawing, money from their accounts. Plus the numbers they use in their RIP are crazy high and different from the numbers they publish in their own articles.

I'm using $10K a year, adjusted for inflation, post 65 for two. If that isn't good enough, we will probably move outside the U.S. and live in some interesting place or tropical paradise and pay less for better quality care.

The Consumer Expenditure Survey is one place to start to get numbers. For 2011, the average cost for a household size of 1.7 "consumer units" (in non marketing terms these would be just be referred to as people or household members) was $4,769. Per person that is $2,805. Adjusted for inflation that is $2,968. Now some of those people may not have the best care, so I'd add a bit to that. I looked at that number in light of numbers those 65+ members post here, and some other online surfing numbers, and came up with $10K for two on average.

Much more than that and we'll be living some place like Martinique and the kids can visit us there, since it isn't too much farther than Del Vista Boca Phase III would be anyway.

I'm not including LTC in that figure. We have money set aside for LTC. It is called, the ooops, sorry kids there goes your inheritance fund.

[kaneohe]

Quote:

Originally Posted by Lakewood90712 I don't think it out of line. My Dad retired at 72 and died at 87. I estimate between Medicare and supp. private insurance, his medical bills were well over a half a million. .......................

Is this his share AFTER insurance? Is this Medigap supplement? If so, how is this possible..........I'm going by the assumption that after Plan F medigap, I will owe nothing..............or perhaps you are including the insurance costs in the total?

[imoldernu]

We're now 14 years into the after 65 age of retirement. Our medicare, medicare supplement and Medicare D and deductible costs are currently about $10K.

Figuring our life expectancy of 87, the total after 65 total would be
22 yrsX 10K =$220k.

That would not include... dental, some uncovered medical costs, or extended care. Easy enough to reach the other 30K.

For a person who is currently 65, the life expectancy is age 79, which would mean:
14 yrs X10K = $140K

Any of the continued care out of pocket costs, would be subject to the type of Medicare or LTC policy... which excess costs would need actuary calculations.

The $250K figure sounds very reasonable if not low.

[Sunset]

I agree that Fidelity has a slant to keep folks working and saving longer. That may just be in how their study was done, because excluding employer retirement health care plans means many excellent plans (low costs when sick) are excluded.
Add in when folks buy private ins, to supplement Medicare, many would opt for low monthly fees (meaning high costs if sick), or even skip purchasing some coverages.

[pb4uski]

Quote:

Originally Posted by imoldernu We're now 14 years into the after 65 age of retirement. Our medicare, medicare supplement and Medicare D and deductible costs are currently about $10K. Figuring our life expectancy of 87, the total after 65 total would be 22 yrsX 10K =$220k. That would not include... dental, some uncovered medical costs, or extended care. Easy enough to reach the other 30K. For a person who is currently 65, the life expectancy is age 79, which would mean: 14 yrs X10K = $140K Any of the continued care out of pocket costs, would be subject to the type of Medicare or LTC policy... which excess costs would need actuary calculations. The $250K figure sounds very reasonable if not low.

imoldernu, those are costs for 2 people? And including insurance premiums?

I'm still struggling to get there based on my experience with great aunt. Her Medicare Part B was $104/month (2013). Part D was $44/month. Medigap was $213/month. Virtually all medical costs were paid for between Medicare and Medigap. the only other thing she had to pay for was Rx co-pays, which was $75-100/month. So all in, her costs were about $5k a year but $4k was insurance premiums.

I think the OP was looking for healthcare costs not including insurance premiums (or long-term care costs) for one person.

[Lakewood90712]

Quote:

Originally Posted by kaneohe Is this his share AFTER insurance? Is this Medigap supplement? If so, how is this possible..........I'm going by the assumption that after Plan F medigap, I will owe nothing..............

No , I misunderstood the OP. The half million would be Medical and dental cost , not out of pocket. If the assisted living care with dementia care is included, out of pocket did exceed 500k , as none of that was insured.

Dad had supplemental insur. from megacorp , so out of pocket medical/dental/RX didn't exceed 5k/yr , however the assisted living , that then became dementia care started at about $6k/mo and ended up at about 9k/mo after 5 years ( Both general rate increases, and increased level of care cost as he got worse ) , all of those costs were out of pocket.

[bhoferp]

I had wondered about that figure, too. I haven't been on Medicare very long and I am healthy. I have had problems with Achilles tendonitis and plantar fasciitis this year. I don't want to have surgery so have been doing conservative treatments, including physical therapy. Medicare has a limit on the amount of physical therapy they will pay for in one year. I've been improving nicely, but am not well yet. My physical therapist thought further physical therapy would help me continue to improve, but since I didn't have any surgery said it would be useless to petition Medicare for more pt. I have supplemental insurance, but they don't pay on anything Medicare doesn't cover. I am doing what pt exercises I can do at home, but don't have ultra sound or other equipment the physical therapist has. I still have the option of paying out of pocket (it's quite expensive) or waiting till next year. I also paid out of pocket for shoe inserts at my podiatrist's office (she made adjustments for my particular needs) at $55 each as Medicare doesn't cover them.

Because my progress has been so slow, I have been paying out of pocket for cold laser treatments (which Medicare doesn't cover) at $42 per session. I think it has been helpful, but adds up pretty quickly.

No matter how many issues you need to have physical therapies for in a year, the Medicare maximum applies. For example, if you have an ankle issue early in the year and use up all your physical therapy and later that year have a shoulder issue, Medicare will not pay for any pt for the shoulder issue. My physical therapist suggested that anyone having both knees replaced should do one during the last half of the year and the other at the beginning of the year.

Since I'm so new to Medicare, I don't know how many times I will run into things Medicare doesn't cover, but could definitely see it adding up over the years.