Medicare: An OverviewSeptember 30, 2014Society for Financial and Professional Development7th Annual Financial Literacy Leadership Conference

Christina Swoope, MSPHPolicy Analyst, Program on Medicare PolicyKaiser Family Foundation

Exhibit 2

TV ads would have you believe that the typical older American looks something like this…

Exhibit 3

45%

31%

27%

20%

16%

13%

5%

NOTE: ADL is activity of daily living. SOURCE: Urban Institute and Kaiser Family Foundation analysis, 2013; Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary Survey 2010 Cost and Use file.

Characteristics of the Medicare PopulationPercent of total Medicare population:

4+ Chronic Conditions

Cognitive/Mental Impairment

Fair/Poor Health

Functional Impairment(2+ ADL Limitations)

Under-65 Disabled

Age 85+

Long-term Care Facility Resident

Exhibit 4

Half of all Medicare beneficiaries had incomes below $23,500 per person in 2013

25% had incomes below $14,400

50% had incomes below $23,500

5% had incomes above $93,900

1% had incomes above $171,650

SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data 2013.

Exhibit 5

Half of all Medicare beneficiaries had savings below $61,400 per person in 2013

SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data 2013.

Savings include retirement account holdings (such as IRAs or 401Ks), savings accounts, bonds and stocks

50% had savings below $61,400

25% had savings below $11,300

50% had savings below $61,400

25% had savings below $11,300

50% had savings below $61,400

8% had $0 in savings or were in debt

25% had savings below $11,300

50% had savings below $61,400

5% had savings above $1,112,950

8% had $0 in savings or were in debt

25% had savings below $11,300

50% had savings below $61,400

5% had savings above $1,112,950

1% had savings above $3,423,800

8% had $0 in savings or were in debt

Exhibit 6

Half of all Medicare beneficiaries had home equity below $66,700 per person in 2013

25% had home equity below $12,250

50% had home equity below $66,700

5% had home equity above $398,500

1% had home equity above $799,850

SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data 2013.

21% had $0 in home equity

Exhibit 7

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$14,400 $16,400

$23,500 $28,250

$41,650

$51,000

$69,350

$84,100

$93,900

$111,900

NOTE: All incomes are adjusted to 2013 dollars.SOURCE: Urban Institute / Kaiser Family Foundation analysis, 2013.

Growth in per capita income is projected to be concentrated among beneficiaries with higher incomes

Per Capita Total Income (in 2013 dollars)

Year

50th percentile (Median)

25th percentile

75th percentile

90th percentile

95th percentile

2013 2015 2020 2025 2030

Exhibit 8

42%$1,989

18%

14%

11%

6%3%3%2%1%

NOTE: Analysis excludes beneficiaries enrolled in Medicare Advantage plans. Premiums includes Medicare Parts A and B and other types of health insurance beneficiaries may have (Medigap, employer-sponsored insurance, and other public and private sources).SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file.

Premiums are a large share of average total out-of-pocket health care spending by Medicare beneficiaries; long-term care facility costs are the largest component of spending on services

Average Total Out-of-Pocket Spending on Services and Premiums, 2010: $4,734

Long-term care facility

Medical providers and supplies

Prescription drugs

DentalInpatient hospitalSkilled nursing facilityOutpatient hospitalHome health

Premiums Services

Distribution of Average Total Out-of-Pocket Spending on Services and Premiums by Medicare Beneficiaries, 2010

Exhibit 9

All bene-ficiaries

Men Women Under 65 65-74 75-84 85+

$1,989 $1,879 $2,080 $948

$2,093 $2,369 $2,229

$2,744 $2,485 $2,956

$2,059

$1,926

$2,876

$5,962 $4,734 $4,363

$5,036

$3,007

$4,020

$5,245

$8,191

ServicesPremiums

NOTE: Analysis excludes beneficiaries enrolled in Medicare Advantage plans. Premiums includes Medicare Parts A and B and other types of health insurance beneficiaries may have (Medigap, employer-sponsored insurance, and other public and private sources).SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file.

Average out-of-pocket spending on services is higher for women on Medicare than men and increases with beneficiaries’ age

Share of beneficiaries 100% 45% 55% 17% 43% 27% 13%

AgeGender

Medicare Beneficiaries’ Average Total Out-of-Pocket Spending on Services and Premiums, by Gender and Age, 2010

Exhibit 10

Housing16975.88

789232.0%

9660.2655154

18.2%

2771.86148

545.2%

Food7890.427

785814.9%Other

15701.64814329.6%

Housing $11,673*

34.3%

$5,087* 15.0% Health Care

$4,722* 13.9%*

Food $5,189*

15.3%Other $7,321* 21.5%*

NOTE: *Estimate statistically significantly different from the non-Medicare household estimate at the 95 percent confidence level. SOURCE: Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense Files, 2012.

Even with Medicare and supplemental coverage, Medicare households spent far more than others on health expenses in 2012

TransportationTransportation

Health Care

Non-Medicare Household SpendingMedicare Household Spending

Average Household Spending = $53,000

Average Household Spending = $33,993*

Exhibit 11

SOURCE: Kaiser Family Foundation illustration of 2014 Income-Related Medicare Part B Premiums. Share of Part B beneficiaries from Urban institute analysis of DYNASIM for the Kaiser Family Foundation.

Overview of Medicare Part B Premiums Under Current Law

My income is.. Less than $85,000

$85,001 - $107,000

$107,001 - $160,000

$160,001 - $214,000

More than $214,000

My monthly Part B premium in 2014 is…

Share of program costs paid by beneficiaries

25% 35% 50% 65% 80%

Share of Part B beneficiaries in this income level

95% 2% 2% < 1% < 1% .

$105 $336$147 $210 $273

Exhibit 12

Employer-Sponsored31%

Medicare Advantage

22%

Medigap15%

Medicaid17%

Other Public/Private1%

14%

SOURCE: Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary 2010 Cost and Use file.

Most Medicare beneficiaries have some source of supplemental coverage, 2010

Total Number of Beneficiaries, 2010: 48.4 Million

No Supplemental Coverage

Exhibit 13

Medicare Beneficiaries have many plans to choose from

Part D Stand Alone Prescription Drug Plans

+

Medicare Advantage

Traditional Medicare

Employer Sponsored

MedicaidMedigapNo Supplemental

PPOHMO PrivateFFS

Plan Choice

Exhibit 14

NOTES: *You may have to pay a higher premium for late enrollment in Part A and/or a higher premium for late enrollment in Part B.SOURCE: Centers for Medicare and Medicaid Services, Medicare and You Handbook, 2014

Important Dates and Deadlines

3 Months3 MonthsInitial Enrollment PeriodEnroll within 3 months of the month of your 65th birthday.*

15October

7December

Open Enrollment

Open Enrollment PeriodReevaluate your health or drug plan annually and make any necessary changes

General Enrollment PeriodEnroll now if you did not whenyou were first eligible.* 1

January

31March

General Enrollment

Birthday Month

Special Enrollment PeriodSign up for Part A and/or Part B the month after your employment or group health plan insurance ends

8 Months

Ex: June, July, August October, November, December

September

Exhibit 15

Very Im-portant54%Somewhat

Important23%

Not too Important12%

Not at all Important10%

SOURCE: Kaiser Family Foundation/Robert Wood Johnson Foundation/Harvard School of Public Health, The Public’s Health Care Agenda for the 113th Congress (conducted January 3-9, 2013)

Medicare is personally important to the majority of the publicHow important is Medicare for you and for your family?