Medicare: An Overview September 30, 2014 Society for Financial and Professional Development 7 th Annual Financial Literacy Leadership Conference Christina Swoope, MSPH Policy Analyst, Program on Medicare Policy Kaiser Family Foundation

Exhibit 1 TV ads would have you believe that the typical older American looks something like this…

Exhibit 2 NOTE: ADL is activity of daily living. SOURCE: Urban Institute and Kaiser Family Foundation analysis, 2013; Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary Survey 2010 Cost and Use file. Characteristics of the Medicare Population Percent of total Medicare population: 4+ Chronic Conditions Cognitive/Mental Impairment Fair/Poor Health Functional Impairment (2+ ADL Limitations) Under-65 Disabled Age 85+ Long-term Care Facility Resident

Exhibit 3 Half of all Medicare beneficiaries had incomes below $23,500 per person in % had incomes below $14,400 50% had incomes below $23,500 5% had incomes above $93,900 1% had incomes above $171,650 SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data 2013.

Exhibit 4 Half of all Medicare beneficiaries had savings below $61,400 per person in 2013 SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data Savings include retirement account holdings (such as IRAs or 401Ks), savings accounts, bonds and stocks

Exhibit 5 Half of all Medicare beneficiaries had home equity below $66,700 per person in % had home equity below $12,250 50% had home equity below $66,700 5% had home equity above $398,500 1% had home equity above $799,850 SOURCE: Urban Institute / Kaiser Family Foundation analysis of DYNASIM data % had $0 in home equity

Exhibit 6 NOTE: All incomes are adjusted to 2013 dollars. SOURCE: Urban Institute / Kaiser Family Foundation analysis, Growth in per capita income is projected to be concentrated among beneficiaries with higher incomes Per Capita Total Income (in 2013 dollars) Year 50th percentile (Median) 25 th percentile 75 th percentile 90 th percentile 95 th percentile

Exhibit 7 NOTE: Analysis excludes beneficiaries enrolled in Medicare Advantage plans. Premiums includes Medicare Parts A and B and other types of health insurance beneficiaries may have (Medigap, employer-sponsored insurance, and other public and private sources). SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file. Premiums are a large share of average total out-of-pocket health care spending by Medicare beneficiaries; long-term care facility costs are the largest component of spending on services Average Total Out-of-Pocket Spending on Services and Premiums, 2010: $4,734 Long-term care facility Medical providers and supplies Prescription drugs Dental Inpatient hospital Skilled nursing facility Outpatient hospital Home health Premiums Services Distribution of Average Total Out-of-Pocket Spending on Services and Premiums by Medicare Beneficiaries, 2010

Exhibit 8 NOTE: Analysis excludes beneficiaries enrolled in Medicare Advantage plans. Premiums includes Medicare Parts A and B and other types of health insurance beneficiaries may have (Medigap, employer-sponsored insurance, and other public and private sources). SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file. Average out-of-pocket spending on services is higher for women on Medicare than men and increases with beneficiaries’ age Share of beneficiaries 100%45%55%17%43%27%13% Age Gender Medicare Beneficiaries’ Average Total Out-of-Pocket Spending on Services and Premiums, by Gender and Age, 2010

Exhibit 9 NOTE: *Estimate statistically significantly different from the non-Medicare household estimate at the 95 percent confidence level. SOURCE: Kaiser Family Foundation analysis of the Bureau of Labor Statistics Consumer Expenditure Survey Interview and Expense Files, Even with Medicare and supplemental coverage, Medicare households spent far more than others on health expenses in 2012 Transportation Health Care Non-Medicare Household SpendingMedicare Household Spending Average Household Spending = $53,000 Average Household Spending = $33,993*

Exhibit 10 SOURCE: Kaiser Family Foundation illustration of 2014 Income-Related Medicare Part B Premiums. Share of Part B beneficiaries from Urban institute analysis of DYNASIM for the Kaiser Family Foundation. Overview of Medicare Part B Premiums Under Current Law My income is.. Less than $85,000 $85,001 - $107,000 $107,001 - $160,000 $160,001 - $214,000 More than $214,000 My monthly Part B premium in 2014 is… Share of program costs paid by beneficiaries 25%35%50%65%80% Share of Part B beneficiaries in this income level 95%2% < 1%< 1%. $105$336$147$210$273

Exhibit 11 SOURCE: Kaiser Family Foundation analysis of the Centers for Medicare & Medicaid Services Medicare Current Beneficiary 2010 Cost and Use file. Most Medicare beneficiaries have some source of supplemental coverage, 2010 Total Number of Beneficiaries, 2010: 48.4 Million No Supplemental Coverage

Exhibit 12 Medicare Beneficiaries have many plans to choose from + Medicare Advantage Traditional Medicare Employer Sponsored MedicaidMedigapNo Supplemental PPOHMOPrivate FFS Plan Choice

Exhibit 13 NOTES: *You may have to pay a higher premium for late enrollment in Part A and/or a higher premium for late enrollment in Part B. SOURCE: Centers for Medicare and Medicaid Services, Medicare and You Handbook, 2014 Important Dates and Deadlines 3 Months Initial Enrollment Period Enroll within 3 months of the month of your 65 th birthday.* Birthday Month Special Enrollment Period Sign up for Part A and/or Part B the month after your employment or group health plan insurance ends 8 Months Ex: June, July, AugustOctober, November, December September

Exhibit 14 SOURCE: Kaiser Family Foundation/Robert Wood Johnson Foundation/Harvard School of Public Health, The Public’s Health Care Agenda for the 113th Congress (conducted January 3-9, 2013) Medicare is personally important to the majority of the public How important is Medicare for you and for your family?