A great misconception of aging in America is the belief that Medicare will pay for your health care needs in old age. It won’t.

It will pay for some of those medical costs. But a typical senior can expect to foot the bill for a substantial portion of their health care, even if they are enrolled in Medicare.

Half of retirees spent more than $4,300 for health care in 2018, according to a study by the Center for Retirement Research at Boston College. And high-cost Medicare recipients spent more than $10,000 that year alone. And that doesn’t even include long-term care, which Medicare generally won’t pay for at all and which was excluded from this study.

CRR authors Melissa McInerney, Matthew S. Rutledge, and Sara Ellen King calculated that typical Medicare beneficiaries spent 25 percent of their Social Security benefits on out-of-pocket health care costs. And for the sickest seniors–the highest spending 5 percent of retirees—health care ate up more than 90 percent of their Social Security benefits.

Premium costs

For many older adults, the bulk of those costs are premiums–for Medicare Part B, Part D drug coverage, and Medicare supplement (Medigap) insurance.  The basic Part B monthly premium in 2022 is $170.10 but for the highest-income retirees it can be as much as $578.30. Part B also requires beneficiaries to pay 20 percent coinsurance. That can be covered by Medigap insurance, but at an additional premium.

Increasingly, Medicare enrollees are joining Medicare Advantage managed care plans that have lower (or sometimes no) premiums. However, MA members also could face higher out-of-pocket costs. For example, out-of-network services generally come with higher copayments and deductibles.

Gender differences

For many seniors, the difference in the share of Social Security benefits that go to health care is not about the variation in health costs at all. Rather, it is a story about differences in Social Security benefits.

This is especially striking when you look at health care costs by gender. Medical expenses for older women are not much higher in dollars than for men, but their Social Security benefits are far lower. According to the Social Security Administration, in 2019, the average annual Social Security benefit for women 65 and older was  $13,505, compared to $17,374 for men.

That means similar medical costs eat up about 22 percent of men’s Social Security income, on average. But they absorb about 28 percent of women’s Social Security benefits.

Same story when you look at the share of all retirement income. In 2017, median income for women age 65+ was $19,180, compared to $32,654 for men. The result: Women retirees spent about 15 percent of their total income on medical costs while men spent 9 percent.

Remember long-term care

Keep in mind that the CRR study looked at health care costs only. They exclude the costs of long-term care, which generally is not covered by Medicare and can add significantly to the out-of-pocket costs of those who need it.

Roughly 70 percent of older adults will need a high level of long-term supports and services before they die and more than half will require paid care.  And those most likely to need it are those with the most limited resources.

Before the pandemic, all older adults could expect to spend an average of about $80,000 out-of-pocket for long-term care over their lifetimes. Those who need a high level of care will spend about $150,000.

When it comes to long-term care, actual costs for women are significantly higher than for men. In part, that’s because their spells of long-term care are much longer on average (about 3 years compared to 2 for men).

Today, those long-term care expenses are likely even higher. Wages for home care aides and facility-based staff have increased significantly, as have other costs.

The message: When you plan for retirement, take into account your out-of-pocket health care costs, even if you have Medicare. And prepare for the better-than-even chance that you will need some paid long-term care in old age. It all will cost much more than you think.