Health Care Cost Challenges for Older Americans

By on September 1, 2011

By Art Koff, Founder –

female doctor talking to patientFacts and Figures You Should Know

Seniors will pay a great deal for their health care in their retirement years and these costs continue to increase every year. Below I have quoted several reliable sources and although the numbers vary, all are in agreement that overall costs will be huge.

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The average 65-year-old couple retiring in 2010 with Medicare insurance coverage would need approximately $268,000 to cover medical expenses over the course of 20 years, according to Fidelity Investments.

This estimate includes deductibles, coinsurance costs, likely out-of-pocket expenses, and some services excluded by Medicare. The figure does not include over-the-counter medications, most dental services, and most long-term care expenses and perhaps a good deal more if they need to use a nursing home.

Americans are living longer and as a result health care expenses continue for many years past what our parents and grandparents paid as a result of their shorter life spans. Once Americans make it to age 65, men can expect to live an additional 17 years and women can expect to live 20 more years.

Some of the estimates for total expenditures are even higher.

According to EBRI a private, nonprofit research institute based in Washington, DC, in 2009, the amount of savings needed to cover health insurance premiums and out-of-pocket health care expenses in retirement are as follows:

A married couple with average health care expenses would need savings of $268,000 to have a 50 percent chance of having enough money for retirement health costs, or $414,000 for a 90 percent chance. (The comparable 2008 numbers were $246,000 and $376,000.)

For those with very high drug expenses (in the 90th percentile), couples would need $807,000 to have a 90 percent chance of having enough money. (The comparable 2008 numbers was $635,000).

These figures do not include the costs to cover long-term care or over the counter drugs.

The full report is available online at

If you are retired and have a family that includes dependent children the 2010 cost for family coverage is $19,596 according to a Towers Perrin study. The survey finds the cost for pre-65 retirees, who are not yet eligible for Medicare, will be $7,596 If you are 65 or older the cost is $3,840 for an individual and $7, cover a retiree plus one dependent.

A 2008 Consumer Expenditure Survey shows that Americans 65 and older spent on average $4,605 per year on health-care expense (insurance, medical services, drugs and medical supplies) in 2008.

According a Boston College report the expected present value of lifetime health-care costs for a couple turning 65 in 2010 in which one or both spouses suffer from a chronic disease is $248,000, including insurance premiums and the cost of nursing-home care. Plus, there’s 5% chance they can expect to spend more than $465,000.

The comparable numbers for couples free of chronic disease, meanwhile, are substantially higher, at $260,000 and $570,000, respectively.

The reason the couple with chronic disease is less is that life expectancy is much less.

Finding Employment

These huge unexpected costs for health care are a major reason why many older Americans are finding it necessary to seek additional income at a time when many thought they could retire. For information on finding employment as an older American go to and click on Employment Assistance or go there directly.

To search for a job go to and click on Retirement Jobs or go there directly.

Medicare Eligibility

Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are 65 years or older and a citizen or permanent resident of the United States.

Information Sources

To order a free copy of the new brochure, “Prescription Drug Options: Managing Your Medicines,” call the Eldercare Locator at 1.800.677.1116

If you have signed up for Medicare but not Social Security there is a Retirement Estimator at the Social Security website which can provide immediate and personalized benefit estimates at available at

For information on Medicare you can call 1-800-Medicare (1-800-633-4227) to speak to a Medicare Customer Representative or visit

Art Koff is a senior in his mid 70’s and after “retiring” from 40+ years in advertising, founded RetiredBrains in 2003 as an information resource for boomers, retirees and Americans planning their retirement. Art can be reached through his site at

About Art Koff

Art Koff is a senior in his mid 70's and after "retiring" from 40+ years in advertising, founded RetiredBrains in 2003 as an information resource for boomers, retirees and Americans planning their retirement. Art can be reached through his site at

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Health Care Cost Challenges for Older Americans