![Page 1: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/1.jpg)
Figure 1. Average Out-of-Pocket Health Care Spending, for All Medicare Beneficiaries Age 65 and Up
$3,455
$5,144
$8,459
$0
$2,000
$4,000
$6,000
$8,000
$10,000
2003 2011* 2021*
* Projected costs assume an annual 5.1% inflation rate.
![Page 2: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/2.jpg)
Figure 2. Average Annual Supplemental Medigap Plan F Premium for Medicare Beneficiaries Age 65 and Up
$1,728
$2,329
$3,830
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2003 2011* 2021*
* Projected costs assume an annual 5.1% inflation rate.
![Page 3: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/3.jpg)
Figure 3. Medicare Beneficiaries Without Supplemental Coverage, 2002
12%13%
17%
12%
6%
0%
5%
10%
15%
20%
Percentage by annual household income
Allbeneficiaries
<$10,000 $10,001–$20,000
$20,001–$40,000
>$40,000
![Page 4: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/4.jpg)
Figure 4a. Average Out-of-Pocket Health Care Spendingin 2003, for Poor and Middle-Income Individuals
$2,995$3,360 $3,475
$3,785
$0
$1,000
$2,000
$3,000
$4,000
$5,000
<135% 135%–199% 200%–399% >400%
Percent of Federal Poverty Level
![Page 5: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/5.jpg)
Figure 4b. Average Out-of-Pocket Health CareSpending as a Percentage of Income in 2003,
for Poor and Middle-Income Individuals
33%28%
21%
12%
0%
10%
20%
30%
40%
50%
<135% 135%–199% 200%–399% >400%
Percent of Federal Poverty Level
![Page 6: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/6.jpg)
Figure 5. How Projected Account Holdings at Age 65Vary for Poor- and Middle-Income Individuals
$0
$10,000
$20,000
$30,000
$40,000
<100% 100%–149%
150%–199%
200%–299%
>300%
15 years, 0.5% of income 15 years, 1.0% of income
Percent of Federal Poverty Level
![Page 7: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/7.jpg)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
<100% of poverty* 100-149% of poverty**
5 yr .5% unsubsidized 5 yr .5% w/ low income subsidy
15 yr .5% unsubsidized 15 yr .5% w/ low income subsidy
5 yr 1% unsubsidized 5 yr 1% w/ low income subsidy
15 yr 1% unsubsidized 15 yr 1% w/ low income subsidy
Figure 6. Pretax Account ContributionsWith and Without Low-Income Subsidy
Accumulated under 5- and 15-year investment scenarios
* 50% annual subsidization level
** 25% annual subsidization level.
![Page 8: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/8.jpg)
Figure 7. Prefunded Account Holdings vs.Annual Medical Costs in 2021, by Income Level
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
<100% ofpoverty
100-149% ofpoverty
150-199% ofpoverty
200-299% ofpoverty
>300% ofpoverty
Medigap Plan F average annual premiumAverage annual out-of-pocket health care spending15 yr savings at 0.5% income & low income subsidy15 yr savings at 1% income & low income subsidy
![Page 9: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/9.jpg)
Figure 8. Account Holdings vs. Costs: The Difference Between Accounts Opened at Age 50 and at Age 60
$0
$2,000
$4,000
$6,000
$8,000
$10,000
Opened at age 60 (2011 projection) Opened at age 50 (2021pProjection)
Account Holdings
Medigap Plan F average annual premiumAverage annual out-of-pocket health care spending, 175% of poverty
For individuals with incomes between 150% and 199% of FPL and at 1 percent investment level
![Page 10: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/10.jpg)
Figure 9a. Participation in IRA or 401(k)-Type Plans,by Income Quintile
23.2%
36.2%
48.2%59.1%
73.5%
0%
20%
40%
60%
80%
100%
Firstquintile
Secondquintile
Thirdquintile
Fourthquintile
Fifthquintile
Percentage of individuals ages 55 to 64 in 2004
Source: Survey of Income and Program Participation Study (2004, Wave 1).
![Page 11: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/11.jpg)
Figure 9b. Participation in IRA or 401(k)-Type PlansRelative to Poverty Level
23%29% 31%
55%
0%
20%
40%
60%
80%
100%
<100% 100%–199% 200%–299% >300%
Percentage of individuals ages 55 to 69 in 2000
Source: Health and Retirement Study, 2000.
Percent of Federal Poverty Level
![Page 12: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/12.jpg)
Figure 10a. Average Retirement Account Holdingsfor Individuals Ages 55 to 69, by Income Quintile, 2004
0%
20%
40%
60%
80%
100%
All incomelevels
Firstquintile
Secondquintile
Thirdquintile
Fourthquintile
Fifthquintile
Source: Survey of Income and Program Participation Study (2004, Wave 1).
Percentage of individuals with no holdings
![Page 13: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/13.jpg)
Figure 10b. Estimated Average Retirement Account Holdingsfor Individuals Ages 55 to 69, by Income Quintile
$42,500
$10,000$25,700
$44,200
$74,800
$152,200
$0
$50,000
$100,000
$150,000
$200,000
All incomelevels
Firstquintile
Secondquintile
Thirdquintile
Fourthquintile
Fifthquintile
Source: Authors’ tabulation based on the Survey of Income and Program Participation Study (2004, Wave 1), the 2000 Health and Retirement Study, and Johnson, Burman, Kobes (2004).
![Page 14: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/14.jpg)
Figure A-1. Projected Holdings at Age 65by Percentage of FPL and Under Alternative Assumptions
$0
$10,000
$20,000
$30,000
$40,000
<100 FPL 100-149 FPL 150-199 FPL 200-299 FPL 300+ FPL
![Page 15: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/15.jpg)
Figure B-1. Subsidized* Account Holdingsand Average Annual Costs for Individuals
Under 100% of Federal Poverty Level
$6,152
$3,830
$1,610
$3,220
$0
$2,000
$4,000
$6,000
$8,000
$10,000
Avg. annualout-of pockethealth care
Avg. annualMedigap Plan F
premium
15-yearinvestment,
0.5% of income
15-yearinvestment,
1.0% of income
Accumulated pretax contribution at 0.5% or 1.0% of income
* Subsidized annually at the 50% level.
![Page 16: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/16.jpg)
Figure B-2. Subsidized* Account Holdingsand Average Annual Costs for Individuals
at 100%–149% of Federal Poverty Level
$7,232
$3,830$3,100
$6,200
$0
$2,000
$4,000
$6,000
$8,000
$10,000
Avg. annualout-of pockethealth care
Avg. annualMedigap Plan F
premium
15-yearinvestment,
0.5% of income
15-yearinvestment,
1.0% of income
Accumulated pretax contribution at 0.5% or 1.0% of income
* Subsidized annually at the 25% level.
![Page 17: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/17.jpg)
Figure B-3. Unsubsidized Account Holdingsand Average Annual Costs for Individuals
at 150%–199% of Federal Poverty Level
7,232
3,830 3,893
7,787
$0
$2,000
$4,000
$6,000
$8,000
$10,000
Avg. annualout-of pockethealth care
Avg. annualMedigap Plan F
premium
15-yearinvestment,
0.5% of income
15-yearinvestment,
1.0% of income
Accumulated pretax contribution at 0.5% or 1.0% of income
![Page 18: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/18.jpg)
Figure B-4. Unsubsidized Account Holdingsand Average Annual Costs for Individuals
at 200%–300% of Federal Poverty Level
$9,022
$3,830
$5,834
$11,668
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
Avg. annualout-of-pockethealth care
Avg. annualMedigap Plan F
premium
15-yearinvestment,
0.5% of income
15-yearinvestment,
1.0% of income
Accumulated pretax contribution at 0.5% or 1.0% of income
![Page 19: * Projected costs assume an annual 5.1% inflation rate](https://reader035.vdocument.in/reader035/viewer/2022072013/56812bce550346895d902757/html5/thumbnails/19.jpg)
Figure B-5. Unsubsidized Account Holdingsand Average Annual Costs for Individuals
Above 300% of Federal Poverty Level
$9,022
$3,830
$16,382
$32,764
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Avg. annualout-of-pockethealth care
Avg. annualMedigap Plan F
premium
15-yearinvestment,
0.5% of income
15-yearinvestment,
1.0% of income
Accumulated pretax contribution at 0.5% or 1.0% of income