Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees

TitleUtilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees
Publication TypeReport
Year of Publication2015
AuthorsBanerjee, S
InstitutionWashington, DC, Employee Benefit Research Institute

This paper separates the more predictable health care expenses in retirement for older Americans (ages 65 and above) from the less predictable ones. Based on utilization patterns and expenses, doctor visits, dentist visits and usage of prescription drugs are categorized as recurring health care services. Overnight hospital stays, overnight nursing-home stays, outpatient surgery, home health care and usage of special facilities are categorized as non-recurring health care services. The data show that recurring health care costs remain stable throughout retirement. The average annual expenditure for recurring health care expenses among the Medicare-eligible population was 1,885. Assuming a 2 percent rate of inflation and 3 percent rate of return, a person with a life expectancy of 90 would require 40,798 at age 65 to fund his or her recurring health care expenses. This does not include recurring expenses like insurance premiums or over-the-counter medications. Usage and expenses of non-recurring health care services go up with age. Nursing-home stays in particular can be very expensive. For people ages 85 and above, the average and the 90th percentile of nursing-home expenses were 24,185 and 66,600 during a two-year period, respectively. Nursing-home stays, home health care usage, and overnight hospital stays are much higher in the period preceding death. More than 50 percent in every age group above age 65 received in-home health care from a medically trained person before death. For those ages 85 and above, 62.3 percent had overnight nursing-home stays before death and 51.6 percent were living in a nursing home prior to death. Some recurring and non-recurring expenses were also much higher before death. Usage of recurring health care services generally goes up with income and usage of non-recurring health care services -- except outpatient surgery and special facilities -- goes down with income. The top income quartile spent significantly more on nursing-home and home health care expenses than the rest. This could be a result of Medicaid coverage for the lower-income, lower-asset groups. Women above 85 have significantly higher nursing-home usage than men. The rest of the differences between men and women are small. The data for this study come from the Health and Retirement Study (HRS), a study of a nationally representative sample of U.S. households with individuals over age 50.

Endnote Keywords

Health care costs/Health care utilization/Health care services/Home health care costs/Hospital costs/Nursing home costs/Prescription drug costs

Endnote ID


Citation Key5889