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End of Life Costs Bankrupt Seniors, Study Finds

A new study finds that the high cost of out of pocket medical expenses at the end of life is a significant financial burden for older adults and their families. Most of these expenses stemmed from long term care costs, raising questions about current policies and individuals’ retirement saving habits.

The study, funded by the National Institute on Aging and conducted by Mount Sinai School of Medicine researchers, found that the average person with Medicare paid $38,688 for medical expenses, which included the cost of hiring at home caregivers and other long term care expenses, in the last five years of life. This number varied significantly among seniors. The top quartile of Medicare recipients averaged costs of $101,791 and the bottom quartile averaged costs of $5,163. Spending an average of $66,155, seniors with Alzheimer’s disease spent more than the overall participants’ average and more than older adults with any other type of illness.

Regardless of costs paid, one quarter of Medicare recipients spent more than their total assets on health care expenses in their final five years, while 43 percent of Medicare recipients spend more than their total assets, excluding their home value, on these expenses. Most of the expenses were associated with long term care, which many individuals erroneously believe to be covered by Medicare. "Medicare provides a significant amount of health care coverage to people over 65, but it does not cover co-payments, deductibles, homecare services, or non-rehabilitative nursing home care," said the study's lead author, Amy S. Kelley, MD, Assistant Professor of Geriatrics and Palliative Medicine at Mount Sinai School of Medicine. "I think a lot of people will be surprised by how high these out-of-pocket costs are in the last years of life."

Researchers are hopeful that the results of this study will influence health policy and encourage individuals to prepare more for retirement costs. "Prior to this study there was not a lot of data on the extent of out-of-pocket spending,” said Dr. Kelley. “This information can serve as an important tool to help individuals set realistic expectations for end-of-life health care costs, and for government officials to use in discussing Medicare policies."

Read more about the health care study published in the Journal of General Internal Medicine.

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