Retirees spent on average more than a third oftheir Social Security benefits on out-of-pocket medical costs in2014, according to a recent study. Even after factoring in othersources of income, medical spending still took a substantial 18percent bite out of seniors’ total retirement income, the studyfound.

In dollar terms, the typical retiree spent $4,274 per year onmedical costs, not including long-term care. Insurance premiumsaccounted for about two-thirds of that total, according to thestudy, published this month by the Center for Retirement Researchat Boston College.

“The premiums are huge,” said Melissa McInerney, an associateprofessor of economics at Tufts University and a study co-author,describing their importance in overall spending by retirees.

McInerney said she was surprised at the findings, however, whenthe team did incorporate spending on long-term care and foundlittle difference in spending between seniors who neededthose services and those who didn’t. Survey respondents whosaid they or their spouse lived in a long-term care facility orreceived home health care services spent 19.2 percent of theirtotal income on medical care, versus 17.8 percent for those whodidn’t need long-term care.

For the study, researchers analyzed 2002-2014 data from theHealth andRetirement Study, a national survey conducted every two yearsof 20,000 people over age 50. The sample was limited topeople at least 65 years old and were receiving both SocialSecurity and Medicare benefits. It included those who also hadMedicaid, Medicare Advantage or private group retiree healthinsurance.

Overall, the average retiree’s out-of-pocket medical spendingdeclined 9 percent over the years studied from just under $4,700 in2004 (in 2014 dollars) to $4,274 in 2014. That’s likely due in partto the introduction of Medicare Part D prescription drug coveragein 2006 and the gradual closing of the drug coverage gap known asthe “doughnut hole” that began in 2010 under the Affordable CareAct, the study found.

However, medical costs for Medicare beneficiaries are expectedto outpace the increase in Social Security benefits after 2018, andretirees will have to put a growing percentage of their SocialSecurity income toward medical care, according to studyauthors, citing projections by Medicare and Social Securitytrustees and the Congressional Budget Office.

“The main takeaway from the study is that right now, even forretirees who live in the community and aren’t using long-term care,medical out-of-pocket spending is high and is a big share of theirincome,” said McInerney. “And we might expect that to grow ifspending rises at end of this decade.”

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KHN’s coverage related to aging & improving care ofolder adults is supported by The John A. Hartford Foundationand coverage of aging and long-term care issues is supported byThe SCANFoundation.