At a Glance | May 30, 2019 Changes in Savings Needed to Cover Health Expenses in Retirement Payment Sources for Health Care Expenses HEALTH CARE PAYMENT SOURCES 1 Among Medicare Beneficiaries Medicare generally covers 2016 only about two-thirds of the 64% 36% cost of health care services Covered by Medicare Not Covered for Medicare beneficiaries ages 65 and older. Out-of-Pocket: 11% Private Insurance: 12% Medicaid: 4% Veterans Affairs: 3% Other: 6% Savings Needed in 2011 and 2019 for Premiums and PREDICTED SAVINGS TARGETS 2 Out-of-Pocket Drug Expenses in Retirement Between 2018 and 2019, the savings needed to fund Women’s Predicted Savings Needs insurance premiums and drug Prescription expenses have risen 5 percent 3 $221k Drug Needs for some cohorts and have -5% +10% $194k -11% -7% High 90% Chance fallen 11 percent for others. The +6% +1% of Having -10% +5% main reason for the predicted +1% $163k Median Enough Savings +10% -1% $156k +3% -10% annual decrease in needed +2% +7% -6% $138k savings for some is related to $131k 50% Chance High -4% +5% -3% +4% -6% of Having +3% the adjustment that is made -8% +5% +5% +4% Enough Savings $104k Median +2% -2% +4% -8% +7% $95k each year to re-establish the -3% baseline for out-of-pocket spending associated with prescription drug use. 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year-to-Year Percentage Changes in Savings Needs Men’s Predicted Savings Needs Prescription 3 Drug Needs $194k -5% +8% $175k High 90% Chance -8% -7% +5% of Having +2% -3% -9% +5% +13% Enough Savings $136k -1% $144k Median +3% -10% +2% -5% +7% $106k $103k High 50% Chance -4% +3% 0% +3% -6% +4% of Having -8% +6% +5% +3% +1% -1% -7% +6% $71k $79k Median Enough Savings +6% -2% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year-to-Year Percentage Changes in Savings Needs Source: Paul Fronstin and Jack VanDerhei. “Savings Medicare Beneficiaries Need for Health Expenses in 2019: Some Couples Could Need as Much as $363,000,” EBRI Issue Brief, no. 481 (Employee Benefit Research Institute, May 16, 2019). 1. EBRI estimates from the 2016 Medical Expenditure Panel Survey. 2. Author simulations based on assumptions described in EBRI Issue Brief no. 481. 3. Prescription drug needs were evaluated at a “high” level such that retirees were at the 90th percentile of prescription drug expenses throughout retirement, and they were evaluated at the median level. © 2019 EBRI This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain any and all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org.