A considerable number of middle-income retirees on Medicare lack understanding or have misconceptions about the program's coverage and costs, resulting in unexpected financial surprises, according to a study released Tuesday by the Bankers Life and Casualty Company Center for a Secure Retirement.
The study, "Retirement Healthcare for Middle-Income Americans," was conducted in September 2011 by the independent research firm The Blackstone Group.
Focused on 400 pre-Medicare Boomers (age 47 to 64) and 400 older adults (age 65 to 75) with an annual household income of between $25,000 and $75,000, the study found that one in three Medicare enrollees still does not know how much the program covers for doctor's visits (33 percent) or hospitalization (31 percent), which are the basic components of the program's health benefits.
Other key study findings include:
- Nearly half (49 percent) do not understand their benefits for vision care and hearing care, which are services typically not covered by Medicare.
- Long-term care was found to be the least understood and the greatest perceived threat to financial security for middle-income Americans. Two out of three (66 percent) Medicare recipients do not know if the program covers long-term care or overestimate its long-term care coverage.
- Two-thirds (65 percent) of those on Medicare report paying the same or more for healthcare now that they are on Medicare, resulting in unexpected financial surprises.
The unexpected financial surprises coupled with the uneasy economy have forced 78 percent of middle-income Americans on Medicare to take at least one action to reduce their healthcare expenses, including switching to generic prescriptions (69 percent), holding off going to the doctor (22 percent), changing to a less expensive health plan (15 percent) or splitting pills to make their prescriptions last longer (12 percent), according to the study.
"Financial fallout from healthcare-related expenses can devastate savings and strip away the enjoyment of one's retirement years," said Chris Campbell, vice president of strategic marketing and business development for Bankers Life and Casualty Company, a national life and health insurer. The company recommends that seniors review their Medicare plan options annually in order to better understand their coverage and avoid such financial surprises.