Medical costs push more seniors into poverty

In this economy many people are feeling the pinch of paying copays for a doctor’s visit or prescription drugs, but for seniors these costs are hitting hard.

Around the country about one in six seniors are now living in poverty, according to new data released by the Census Bureau. That’s nearly double previous estimates and the largest increase for any group in the report. The main culprit: out-of-pocket medical costs.

This experimental Census analysis factors in living costs and health care expenses in determining the poverty line. And with this in mind it makes sense that seniors would see a large increase in poverty, according to Steven Wallace. He’s the associate director of the UCLA Center for Health Policy Research.

“The general public says, well, when you get older you get Medicare and doesn’t that cover it?” Wallace said. “And the answer is no.”

Wallace says this new approach to measuring poverty is a long time coming. In the West, seniors face higher living costs, especially in the bigger cities like Los Angeles, he says.

Add in the struggling economy, Wallace says, and seniors are watching their prized nest eggs lose money – their homes, savings and investments. That means budgets get tighter and out-of-pocket costs are harder to cover.

“So if the middle class is struggling, what’s happening to people who have less than them?” Wallace said.

Well, for lower-income seniors, it’s worse.  Wallace says they’ve seen continued budget cuts to safety net programs, including disability checks and aging services.

“It’s coming at them from every direction,” Wallace says. “They’re living in substandard housing and they’re not able to buy healthy food.”

The reality is that many of California’s seniors are really not making it. Wallace says 1.4 million seniors in California are “near poor” or with incomes below 200 percent of the poverty level.

When seniors are living so close to the edge, Wallace says, they have to make tough choices. Often they’ll cut medications in half to avoid copays or skip doctor visits.

Wallace says another big financial burden for seniors is long-term care. He says a poll by UCLA and the SCAN Foundation last summer found that two-thirds of Californians could not afford three months of long-term nursing care that costs on average $6,500 per month. Medicare and regular insurance does not cover these costs.

Wallace says seniors are in trouble even if they don’t need nursing home care. For example, for someone to help you bathe and get dressed at home 5 days a week it could cost around $12,000 a year for minimum wage help.

“If you have a modest retirement income of $30,000 or $40,000 that’s almost half of your money,” he said.

But Wallace said there is some hope for seniors. Under the federal health care law some out-of-pocket expenses are covered. One of the most significant is for patients who fall into the infamous donut hole for prescription drug coverage. Under new provisions, if you exceed your drug benefit and hit the donut hole, you’ll get half off most of your drug costs while you’re waiting for coverage to kick in again.

Also, preventive services like colonoscopies and an annual physical are now free for most patients.

But Medicare expert Margaret Reilly says while health reform has brought some relief, many seniors are way beyond preventive care.

“For people who are elderly and ill they don’t care about that,” she said.

Reilly heads HICAP Services of Northern California, which provides free Medicare counseling. She says one of the most important choices seniors will consider is buying additional Medicare coverage to lessen the blow of out-of-pocket expenses.

Those expenses add up because patients are on the hook for about 20 percent of their Medicare costs each year, she said. That includes services like: in-patient hospital stays, outpatient doctor visits, lab work, imaging tests or chemotherapy.

That’s where plans to supplement these costs come in – these are either Part C plans, more commonly known as Medicare Advantage Plans, or Medigap policies.

The open enrollment period for this year closes on Dec. 7, but Reilly says it’s not too late to make sure you’ve considered the additional coverage you need to help avoid unexpected out-of-pocket expenses. She also says it’s important to check if your coverage has changed so you can prepare for additional costs if needed.