Health Care Expense as a Percentage of Annual Expenses

[tenant13]

0% - when I applied for ACA I didn't qualify because my income was below the threshold (I live off savings) so they pushed me into Medicaid which covers everything, including dental and vision. The thing is that once you're on it, and have no regular monthly income, you can seemingly keep it. I may or may not sell equities or do ROTH conversions at the end of the year (tbd) but if it's a one time lump sum that only counts as income in the month it is received, Medicaid eligibility doesn't change since they only care about regular monthly income. It's a little crazy but I didn't write the law - I just follow it.

 

[jim584672]

0% - I was supposed to come out of Medicaid this year, but with the COVID-19 emergency they say I stay in until the emergency is over.

 

[ShokWaveRider]

15% Now I am on Medicare (DW is on ACA) before that it was about 5% when we were both on ACA.

 

[Sojourner]

My total healthcare costs are running about 11% of my average annual spending. The vast majority of that is from insurance premiums. I'm over the limit for any sort of premium subsidy, so I pay the full retail rate for a bronze-level ACA plan with a $6,900 out-of-pocket max.

I'm looking forward to the day when I can hop on my future DW's (currently, DGF) employer-sponsored plan. My current BCBS plan is so pitiful that I don't even use it to fill prescriptions. GoodRx actually gets me lower pricing 99% of the time. And I discovered recently that the "cash self-pay" option my dermatologist offers is actually cheaper than my insurance co-pay for routine office/telehealth appointments. It's truly mind boggling to comprehend just how bad the cost/benefit ratio is for unsubsidized individual-market medical insurance.

 

[W2R]

What percentage of your annual expense is your health care premiums family plan or non - family plan? What are your out of pocket deductibles?

I am on Federal employee/retiree insurance, which converted to a Medicare supplement when I turned 65 and started paying for Medicare Part B. The reasons I chose a career as a federal employee, was this and other retirement benefits, as well as job security as I grew older.

With this combination of this (BCBS) insurance and Medicare, I have zero deductible, zero co-pays. I pay for my share of prescription drug costs, and for dental.

The combination of monthly premiums/fees for Medicare and for BCBS in 2019 came to about 9% of that year's spending totals. Like others here, I think this is fairly useless info since it depends on what you spent overall and that varies a lot from person to person.

 

[Independent]

In 2019, we spent $47,230 on the two of us (couple, ages 71 and 72).
Our medical spending was $16,070, or 34%.

(We also gave money away and paid taxes, those dollars are not in the total above.

 

[Dtail]

15% Now I am on Medicare (DW is on ACA) before that it was about 5% when we were both on ACA.

Yup, I expect my medical expenses to go up when eventually getting on Medicare vs. the ACA.

 

[Dtail]

In 2019, we spent $47,230 on the two of us (couple, ages 71 and 72).
Our medical spending was $16,070, or 34%.

(We also gave money away and paid taxes, those dollars are not in the total above.

Based on other medical cost posts, I believe there are many more examples similar to yours with a high % of medical; just not posting here.

 

[braumeister]

My "medical" spending category is fairly broad, since it includes dental and anything even remotely related to healthcare. Over the past 13 years it has averaged right around 5% of total spending.

 

[Teacher Terry]

Ours is a fourth of our gross income. I can’t wait for my husband to be old enough for Medicare so we can get off our state retiree insurance.

 

[CardsFan]

We are retired and now both on Medicare. Total OOP costs with Medicare A&B, Part D, and Part G medigap is about 9-10% of normal spend (including taxes). MegaCorp supplements a little, so that brings it closer to 7-8%. No complaints.

 

[jazz4cash]

I have Federal Health insurance and Medicare Part A. Looking at itemized deductions over the years it looks like we average about 10-12% of our income after taxes (which is what we spend) for health expenses. We haven't itemized since 2017 and probably won't absent significant tax law changes. I keep meticulous records of medical bills to make sure we pay only what is required after insurance but I don't total up the sum anymore so for any given year now it's a guess.

No Medicare Part B? I’m just starting to look into the combination of Medicare +FEHB for when I turn 65. I guess I’m a bit annoyed that the FEHB premium isn’t reduced. Maybe I’m starting to understand why DB refused to sign up for Medicare but need to verify if he at least signed up for Part A.

I think we are ~8-12% with the higher percentage including some extraordinary dental expenses.

 

[Mr. Tightwad]

I spend $10 a year. 5 for a physical and 5 to see the dermatologist.

 

[Golden sunsets]

We are 71 & 73, with a gold plated FEHB(former Gov't employee) health plan which became supplemental at age 65 so premiums are for that plan plus Medicare B, and subsidized premiums for vision and dental. OOP is normally zero, except when dental extraordinary expense occurs such as this year with a dental implant and a root canal. The premiums alone, run 3.5% of total expenses including federal and state income taxes(our biggest expense). With OOP included in total cost, for the non covered excess dental, this year the total health care cost reached 5.8%. This cost also does not include premiums for LTC, which this year represented another 5% of total expenses. Starting in 2021, we will get wacked with IRMAA, so the premiums will be 5.7%, vs. the 3.5% current premium expense.

 

[Golden sunsets]

No Medicare Part B? I’m just starting to look into the combination of Medicare +FEHB for when I turn 65. I guess I’m a bit annoyed that the FEHB premium isn’t reduced. Maybe I’m starting to understand why DB refused to sign up for Medicare but need to verify if he at least signed up for Part A.

I think we are ~8-12% with the higher percentage including some extraordinary dental expenses.

Jazz; Look into Aetna Direct in your federal options once you are on Medicare, which is a plan offered in every state designed for Federal retirees. When you look for it, make sure you check in the HMO State by State plans rather than in the nationwide section of the plan offerings. The code is N61, N62, or N63.

The premium is less than BCBS or whatever you have now and there is an HRA which kicks back $900/pp, up to $1,800/year to offset your Part B premiums. AND there is a zero deductible and no copays, except for prescription copays, where the copays on most meds are $2 per prescription for a 90 day supply, as long as you are also covered by Part B..

We switched 3 years ago, from BCBS Basic and have been very happy. There are no limits on the physician network you choose, as long as the physician or provider accepts medicare. You file a claim monthly for reimbursement of the medicare premium, or you can choose to wait to file a claim until your monthly cumulative Part B premiums exceed the $900/$1,800 kick back and get a big fat check back within 30 days. Customer service is very good. No complaints at all.

 

[donheff]

No Medicare Part B? I’m just starting to look into the combination of Medicare +FEHB for when I turn 65. I guess I’m a bit annoyed that the FEHB premium isn’t reduced. Maybe I’m starting to understand why DB refused to sign up for Medicare but need to verify if he at least signed up for Part A.

I think we are ~8-12% with the higher percentage including some extraordinary dental expenses.

This is a tough call. Most Feds take Part B (I have read about 70%). But, years ago I was at a session with the guy who writes the annual FEHB checkbook and he recommended that most Feds would be better off financially skipping it. The carriers are certainly happy to get 80% of their physicians costs picked up by Medicare - they will waive all deductibles and co-pays, and cover the extra charges for out of network (Medicare covered) care. Without Part B you will pay the same for care as you did when employed. The big plus is that you will not pay Part B. I ran the numbers. We already would pay more than the minimum Part B charge. When DW's RMDs kick in a few years from now, we would pay a lot for Part B. It just isn't worth it for us. One caution - there isn't any going back. If you waive Part B (except when you are covered by a working spouse's plan) you will pay a 10% per year surcharge if you later add Part B.

As for Part A, I can't see any downside since it is free and will cover hospitalization at out of network hospitals.

 

[Golden sunsets]

This is a tough call. Most Feds take Part B (I have read about 70%). But, years ago I was at a session with the guy who writes the annual FEHB checkbook and he recommended that most Feds would be better off financially skipping it. The carriers are certainly happy to get 80% of their physicians costs picked up by Medicare - they will waive all deductibles and co-pays, and cover the extra charges for out of network (Medicare covered) care. Without Part B you will pay the same for care as you did when employed. The big plus is that you will not pay Part B. I ran the numbers. We already would pay more than the minimum Part B charge. When DW's RMDs kick in a few years from now, we would pay a lot for Part B. It just isn't worth it for us. One caution - there isn't any going back. If you waive Part B (except when you are covered by a working spouse's plan) you will pay a 10% per year surcharge if you later add Part B.

As for Part A, I can't see any downside since it is free and will cover hospitalization at out of network hospitals.

Don; Have you priced taking B in conjunction with Aetna Direct with the HRA kickback, described above? Or perhaps it's too late for you if you have already decided.

 

[jazz4cash]

Don, Golden....thanks for the extremely helpful responses.

 

[sengsational]

I think I MAKE 2% of my annual spending rate on healthcare.

My logic and math might be off, so check me on this. I get HDHI through the ACA and the PTC equals the premium (no out of pocket). We don't see any doctors or take any prescriptions. Then, I put $9K on the first page of the Federal income tax form (HSA deduction) because we have the high deductible policy, which saves me money on taxes, thus making money. I treat the HSA as a "super Roth" and plan to use it on Medicare premiums, when those days come.

 

[Golden sunsets]

Don, Golden....thanks for the extremely helpful responses.

No problem; Don't consider taking Aetna Direct though until you are actually 65 and have B. The plan is offered to anyone, but it is not nearly as good a plan unless you are also on Medicare. We were on BCBS High Option until turning 65 when we switched to BCBS basic. Then when Aetna Direct began being offered around 4 years ago we switched. and never looked back.

 

[donheff]

Don; Have you priced taking B in conjunction with Aetna Direct with the HRA kickback, described above? Or perhaps it's too late for you if you have already decided.

I don't believe it was available when I went on Medicare 7 years ago. It does look interesting but its about $53 more per month than my self+1 GEHA plan so about $600 of that $1800 fund would be lost there and our Part B would be high so I'm still happy with my choice. It does look like an interesting plan. I had Aetna decades ago and like them. Then they dropped from the program for a while IIRC. I can enroll in it in open season and pay the copays and deductibles. I will take a look to see how it compares with GEHA for other benefits. All of the plans have excellent networks here in DC so it comes down to expected out of pocket expenses. A lot of people take BCBS just because they think its "safe" but the costs are out of line compared to other plans and the networks are about the same (at least here).

 

[Golden sunsets]

I don't believe it was available when I went on Medicare 7 years ago. It does look interesting but its about $53 more per month than my self+1 GEHA plan so about $600 of that $1800 fund would be lost there and our Part B would be high so I'm still happy with my choice. It does look like an interesting plan. I had Aetna decades ago and like them. Then they dropped from the program for a while IIRC. I can enroll in it in open season and pay the copays and deductibles. I will take a look to see how it compares with GEHA for other benefits. All of the plans have excellent networks here in DC so it comes down to expected out of pocket expenses. A lot of people take BCBS just because they think its "safe" but the costs are out of line compared to other plans and the networks are about the same (at least here).

Yeah. One thing to consider is, your doc's/providers have to be in network, if you don't also have B. I imagine they probably all are if you are in DC. I think they would be in my area as well, as they are very mainstream. DH and I will get whacked starting next year by jumping from no IRMAA all the way into the second tier of IRMAA, which effectively doubles the premium. I think we will still keep to this plan, as I'm a chicken about dropping Part B. I just don't like that you can't get back in. I worry about future changes.

 

[Retired Expat]

I would estimate our healthcare premiums run about 7-8% of our typical annual expenses. I do itemize our taxes so we get some back.

Except for this folks on military or some other amazing plan. For most of us it is kind of a crap shoot. Where you live, what is your level of health what meds you take. Based on last year (a low income year) premiums, Meds and out of pocket expenses we about 8%. Which isn’t bad. All things considered with my history....

 

[jazz4cash]

For all the planning to ER, I completely missed a chance to actively avoid IRMAA (which I only heard about recently) based on Medicare 2 yr look back. I think I’ll miss it by luck but may well hit tier 1 in subsequent years. That’s another significant reason to Roth concert but I totally missed.

I assume there is minimal added value to any Medicare supplement plans if you have part B plus FEHB.

 

[Golden sunsets]

For all the planning to ER, I completely missed a chance to actively avoid IRMAA (which I only heard about recently) based on Medicare 2 yr look back. I think I’ll miss it by luck but may well hit tier 1 in subsequent years. That’s another significant reason to Roth concert but I totally missed.

I assume there is minimal added value to any Medicare supplement plans if you have part B plus FEHB.

Correct. Certainly no need for a supplement policy if you have B and FEHB. There is no OOP, other than prescription copays on the major medical. Dental is about it for any major other expenses. Implants and caps are only covered at 60%.