Medicare Recipients Face Significantly Higher Projected Costs: EBRI

According to a press release accompanying the newly updated report, EBRI has improved on previous iterations of its Medicare cost simulation model by incorporating recent changes to Medicare Part D enacted by the Inflation Reduction Act of 2022 and testing varying assumptions about Medicare Advantage and Medigap plans that Medicare beneficiaries may purchase.

The release also highlights that, while there is significant individual-level variation, enrollees in Medicare Advantage plans generally have lower savings targets. Specifically, a man enrolled in Medicare Advantage who has median drug expenditures and an average usage of health care services will need to have saved $56,000 to have a 50% chance of meeting his health care spending requirements in retirement. He would need $96,000 to have a 90% chance.

Under the same circumstances, a woman will need to have saved $67,000 to have a 50% chance and $113,000 to have a 90% chance of having enough to cover her health care costs in retirement. Couples in this situation will need to have saved $123,000 to have a 50% chance and $184,000 to have a 90% chance of covering their health care expenditures in retirement.

Of course, as the press release notes, there are factors other than out-of-pocket costs to consider when it comes to choosing a Medicare Advantage plan over traditional Medicare. Medicare Advantage plans often have limited networks or may require approval before certain medications or services are covered.

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