Health Care Affordability Problems by Income Level and Subsidy Eligibility in Medicare

Standard Medicare benefits include substantial cost sharing, often resulting in high out-of-pocket expenses for beneficiaries. Financial assistance programs help mitigate these costs by covering Medicare Parts A and B premiums and cost sharing for beneficiaries with limited assets and incomes below 100% of the federal poverty level (FPL) and premiums for beneficiaries with incomes between 100% and 150% of the FPL.

To examine health care affordability problems among Medicare beneficiaries by income levels aligned with subsidy eligibility.

This cross-sectional study of Medicare beneficiaries using data from the 2018-2022 Medical Expenditure Panel Survey was conducted from December 2024 through March 2025.

Household income categorized into 4 groups: low income (<100% of FPL), near low income (100%-150% of FPL), middle income (150%-400% of FPL), and high income (>400% of FPL).

Three indicators of health care affordability problems: financial burden (spending ≥20% of annual postsubsistence income on out-of-pocket costs), financial barriers to care (delaying or forgoing care due to cost), and medical debt.

The sample included 24 398 Medicare beneficiaries (mean [SD] age, 71.6 [9.3] years; 54.9% female). Out-of-pocket spending increased with increasing income: $1363 (95% CI, $1301-$1425) for beneficiaries with near low income, $1765 (95% CI, $1571-$1958) for beneficiaries with low income, $2611 (95% CI, $2512-$2710) for beneficiaries with middle income, and $3964 (95% CI, $3875-$4054) for beneficiaries with high income. However, beneficiaries with near low income faced the highest levels of health care affordability challenges compared with the other income groups. After adjusting for age, sex, and health status, 54.0% (95% CI, 52.7%-55.3%) of beneficiaries with near low income reported experiencing at least 1 affordability problem, compared with 43.0% (95% CI, 40.5%-45.5%) in the low-income group, 45.2% (95% CI, 44.1%-46.4%) in the middle-income group, and 25.5% (95% CI, 24.7%-26.4%) in the high-income group. These patterns remained consistent across all affordability measures. Although few beneficiaries experienced all 3 types of affordability problems, larger proportions of beneficiaries reported financial burden alone, financial barriers to care alone, or both without medical debt.

In this cross-sectional study of Medicare beneficiaries, health care affordability problems were common. Medicare beneficiaries with near low income, who qualified for only partial financial assistance with Medicare costs, faced greater financial hardship compared with beneficiaries in other income groups. These affordability challenges may have restricted access to needed care, highlighting the need for targeted strategies to enhance financial protections and improve health care affordability for these beneficiaries.