Rising health costs and a preventable lack of proper coverage are driving more older adults into medical debt, new data reveals.
A report this month by the Urban Institute and Robert Wood Johnson Foundation finds that 17.6% of adults aged 65 and older are saddled with medical debt. That is despite the fact that almost everyone over 65 has Medicare health coverage.
Medicare Alone Is Not Enough
“Right now, about one in 10 people are only covered by original Medicare, which is, in my opinion, a huge mistake,” Mike Boshardy, Medicare attorney and licensed Medicare Advisor, told SavingAdvice. His company, The Pocket Protector, is a brokerage that allows clients to compare and enroll in Medicare supplement and Medicare Advantage plans independently online.
“You need to have some form of supplemental coverage, and the reason for that is the potential of co-insurance that you’re going to be faced with,” said Boshardy. “Because if something does go wrong, and as we all know in life, it’s not if, but when, then you’re going to get stuck with a very large bill that you likely cannot pay.”
Millions of Older Adults Stuck With A Very Large Bill
“I care for 3,000 to 3,500 patients a year, and about 1,500 of them are on Medicare or Medicaid,” Dr. Harsha Moole explained to SavingAdvice. “Medical debt in seniors is not an abstraction to me. I watch it happen at the bedside.”
Moole practices internal medicine at Stormvale Health, Topeka, KS, and founded FindMyDirectDoctor, a national registry of concierge doctors who accept upfront monthly fees from patients in place of insurance.
The Consumer Financial Protection Bureau estimates that nearly 4 million older Americans carry unpaid medical bills totaling roughly $53.8 billion. That is about 7% to 8.5% of people over 65.
Approximately one in 10 seniors who carry medical debt owe $10,000 or more, reports KFF. A report from the CFPB put the average at $13,800. Of those seniors carrying medical debt, 41.2% have been contacted by a collection agency.
Breaking Down The Debt
A report from KFF found that traditional Medicare beneficiaries spent an average of $1,107 out-of-pocket for dental expenses in 2023. That same report shows dental as the second leading contributor to medical debt among older adults, just behind lab fees and diagnostic tests. A full list of sources for medical debt in adults over 65 includes:
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- Lab fees and diagnostic tests (49%)
- Dental care (48%)
- Doctor visits (41%)
- Hospitalizations (34%)
- Emergency care (31%)
- Prescription drugs (24%)
- Ambulance services (19%)
- Mental health (6%)
- Long-term care (6%)
Lack Of Dental Care Is One Of The Largest Gaps In Coverage
You might be surprised to see dental care as a close second in the list of medical debt for older adults. However, Boshardy says dental debt can be prevented.
“In the statistic for roughly one out of five seniors carrying medical debt, that includes dental,” said Boshardy. “So, if you are in a position where you are going to need a root canal or a bridge or something goes wrong with your dentistry, that’s another area where you need to have proper coverage.”
Boshardy points out that many Medicare Advantage plans include dental coverage for a $0 premium. To add dental coverage to a Medicare Supplement plan requires pairing dental coverage from another insurance company and carries a monthly premium.
Consequences of Medical Debt For Seniors
Carrying debt, especially for those on a fixed income, is stressful. Many older adults with medical debt are compensating by cutting back on core expenses, according to National Council on Aging (NCOA) research.
Of seniors carrying medical debt, 42% have cut back on food and other necessities or are using credit cards and loans to get by, reports NCOA. Additionally, 62% are skipping doctor visits and prescriptions because of medical debt, according to KFF.
“Here is what it looks like on the ward,” explained Moole. “Patients stretch inhalers past the date on the box. They cut pills in half without telling anyone. They cancel follow-up visits because the co-pay competes with the electric bill. When care becomes unaffordable, nobody files a complaint. They just quietly stop coming. Then they show up in the ER much sicker, and the bill they were avoiding becomes a much bigger bill.”
How Medicare Part A & B Work
To recognize gaps in traditional Medicare (Part A & B), it is necessary to understand how they work.
Part A is hospital insurance. It pays part of inpatient hospital costs, skilled nursing facility stays, surgery, hospice care, and even some home health care. Part B helps pay for doctors’ visits, outpatient care, some preventive services, and some medical equipment and supplies.
While traditional Medicare pays parts or some of your medical expenses, it does not pay all of those expenses. That is where the gaps come in.
To plug Medicare gaps or reduce them, Medicare beneficiaries can add individual supplementary coverage, such as Part D to cover prescriptions or individual dental or vision policies. Medicare Advantage plans are another option. They often include dental, prescription and vision as part of their coverage. In addition, they may include other benefits.
A big concern for many beneficiaries is cost. Traditional Medicare and supplement plans can run hundreds of dollars a month. Advantage plans, on the other hand, often come with no premium.
However, even a zero-premium Medicare Advantage plan has limits. For example, the out-of-pocket maximum in 2027 is $9,850 for in-network services. That is a big number for beneficiaries with limited resources. However, it beats the 20% uncapped coinsurance for all medical expenses under original Medicare alone.
Costs for Medicare coverage can vary. Medicare gives a complete review of expenses.
How To Get Help With Medical Debt
Being buried in medical debt can be overwhelming. But there are resources that may help.
- NCOA BenefitsCheckUp. This free online tool allows you, as an older adult, to check your eligibility for federal, state, and local assistance for a variety of needs.
- Eldercare Locator. This service is part of the Administration for Community Living, a division of the U.S. Department of Health and Human Services. It allows you to find financial assistance through its internet portal, email, text, and live chat at 1-800-677-1116.
Other programs designed to cut costs for moderate to low-income Medicare beneficiaries include:
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- Medicare Savings Programs (MSPs). These state-run plans pay for Medicare premiums and may cover deductibles and coinsurance.
- Extra Help. The Social Security Administration operates this program to help lower Part D prescription costs.
If you are already in debt, these organizations may help.
- Dollar For. This non-profit pushes for hospital debt forgiveness and refunds on past payments. It also helps fill out applications for financial assistance where it is available.
- Undue Medical Debt. This organization pays off medical debt using donor funds and government programs. There are income or debt requirements to qualify for this assistance.
- Patient Advocate Foundation. PAF offers free case management services, help with medical bills and insurance appeals. In addition, it issues small financial aid grants for patients dealing with serious, chronic, or life-threatening illnesses.
Hospitals Easing Financial Assistance Access
Non-profit hospitals are required by federal law to offer financial assistance for low-income patients. However, the application process can be complicated and time- consuming. As a result, some states have adopted “presumptive eligibility” laws that require hospitals to automatically screen uninsured patients, Medicaid enrollees, and patients with bills over $1,500 for financial assistance before billing them. That wipes out or reduces patient costs.
Oregon became the first state in the nation to enact such a law, and California’s measure goes into effect this summer. Meanwhile, the idea is gathering interest in other states.
SavingAdvice will have an in-depth examination of this new approach to hospital debt in November.
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