Medical Expenses Partly To Blame for Increasing Number of Seniors in Debt

A USA Today cover story on April 25 examines the increased number of seniors who have large debts or have filed for bankruptcy, often as a result of medical expenses. Many seniors who rely on Social Security income have begun to use credit cards to cover the cost of medical expenses and prescription drugs. As a result, household debt for seniors rose about 164% to $20,302 between 1992 and 2000 -- compared with 92% for individuals younger than age 65 -- and medical emergencies often force seniors with debts to file for bankruptcy. Although seniors account for a small percentage of bankruptcy filings, they represent the "fastest-growing group" of individuals who file for bankruptcy. In 2001, 82,000 seniors filed for bankruptcy, a 244% increase from 1991, according to a Harvard University study. About 50% of seniors who file for bankruptcy said that they filed as a result of medical expenses, USA Today reports. Out-of-pocket medical expenses for seniors rose almost 50% between 1999 and 2001, according to a Commonwealth Fund report, and costs will likely increase as many employers begin to eliminate health benefits for retirees, which often provide supplemental prescription drug coverage for Medicare beneficiaries. In addition, many managed care companies have eliminated prescription drug coverage from their Medigap plans, which has increased out-of-pocket costs for seniors (Dugas, USA Today, 4/25).