Middle-income retirees on Medicare lack understanding or have misconceptions about the program's coverage and costs resulting in unexpected financial surprises, according to the latest findings released by the Bankers Life and Casualty Company Center for a Secure Retirement (CSR).
The study, “Retirement Healthcare for Middle-Income Americans,” focused on 400 pre-Medicare baby boomers (age 47 to 64) and 400 older adults (age 65 to 75) with an annual household income of between $25,000 and $75,000. The study found that one in three Medicare enrollees still did not know how much the program covers for doctor's visits or hospitalization, which are the basic components of the program's health benefits.
The CSR study also found nearly half (49 percent) do not understand their benefits for vision care and hearing care -- services typically not covered by Medicare.
The study found long-term care to be the least understood and the greatest perceived threat to financial security for middle-income Americans. Two out of three (66 percent) Medicare recipients did not know if the program covers long-term care or overestimate its long-term care coverage.
Medicare has long been labeled as an entitlement program but middle-income Americans say it is not a “free ride.” Two-thirds (65 percent) of those on Medicare report paying the same or more for healthcare now that they are on Medicare, resulting in unexpected financial surprises.
The most common financial surprises for Medicare enrollees is the cost of monthly Part B premiums, with 44 percent of respondents reporting that they paid more than expected.
The unexpected financial surprises coupled with the uneasy economy have forced 78 percent of middle-income Americans on Medicare to take at least one action to reduce their healthcare expenses, including switching to generic prescriptions (69 percent), holding off going to the doctor (22 percent), changing to a less expensive health plan (15 percent) or splitting pills to make their prescriptions last longer (12 percent).
"Financial fallout from healthcare-related expenses can devastate savings and strip away the enjoyment of one's retirement years," said Chris Campbell, vice president of strategic marketing and business development for Bankers Life and Casualty. He suggested that consumers review Medicare plan options annually and look into new health and prescription drug plans that better meet their needs. He also recommended that consumers consider purchasing additional healthcare insurance to address services not covered by Medicare and out-of-pocket expenses.
According to the CSR study, three out of four (77 percent) have purchased an insurance product or a Medicare Supplement insurance plan to help pay out-of-pocket expenses typically not covered by the Medicare program.
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