Retirement Security Medallion

Retirement Security

More and more people are retiring, and many are living longer in retirement. Health care costs are rising, Social Security is stretched to the limit, and debt—both personal and public—is a threat to financial security. Many Americans may find themselves without adequate savings in retirement.

View our report on The Nation’s Retirement System

Programs That Offer Medical Care Coverage

There are a number of programs that offer medical care coverage to eligible individuals. Health insurance protects individuals from the risk of financial hardship when they need medical care, and uninsured individuals may refrain from seeking necessary care because of the cost. The Patient Protection and Affordable Care Act included a number of provisions that changed private health insurance requirements, and these changes affect the availability and cost of health insurance that individuals purchase directly.

Medicare, Medicaid, and employer-sponsored or individual health care plans can all play a role in financing health care in retirement. Many older Americans will also have additional long term care needs. We discuss the role these programs play and why Medicare and Medicaid are High Risk programs.

Medicare and Medicaid's Role in Retirees' Access to Health Care

Many older Americans rely on Medicare to help them control their health care costs. This program is particularly crucial because retirees generally require more care and have less disposable income to spend on it. Medicare is a federal program that provides health care coverage for individuals at all income levels. (Medicaid is an income-based program.) We designated Medicare as a High Risk program because its complexity and susceptibility to improper payments, in addition to its size, have led to serious management challenges. Addressing these challenges requires improvements to payment methods, program management, and program safeguards. Learn more about the challenges facing Medicare.

Medicaid also plays an important role in providing health care coverage low-income individuals and individuals who are aged or disabled. Medicaid is one of the largest sources of funding for acute health care, long-term care, and other services for low-income and medically needy populations. The program is jointly financed by the federal government and the states. The size, growth, and diversity of the Medicaid program presents oversight challenges. We designated Medicaid as a High Risk program due to concerns about the adequacy of fiscal oversight. Medicaid is the largest health program as measured by enrollment and the second largest as measured by expenditures, second only to Medicare. Learn more about the challenges facing Medicaid.

Other Health Care Plans for Retirees

Many U.S. workers and retirees rely on employer-sponsored health care benefits from as either their primary source of coverage or as a supplement to their Medicare coverage. Many workers have relied on employer-sponsored health benefits until they became eligible for Medicare or to pay for out-of-pocket expenses not covered by Medicare. Retirees without employer-sponsored health coverage and not eligible for Medicaid may seek to purchase health insurance directly as individuals, including through Marketplaces established by the PPACA, or purchase Medicare supplemental insurance commonly known as "Medigap."

We’ve reported that the number of employers offering health benefits to retirees has declined considerably. Many employers that offer health benefits have required workers and retirees to pay a higher share of out-of-pocket costs and some have recently introduced consumer-directed health plans, which trade lower premiums for significantly higher deductibles.

Long-Term Care

Medicaid provides long-term care to states' most vulnerable populations, such as the elderly or disabled. We've reported that on average, community-based care costs less than at a nursing facility or other institution—and many people prefer it.

States are increasingly paying for long-term care through managed care programs, paying based on set, monthly rates. How states structure these rates—aligning incentives to minimize cost and maximize service—is critical to enhancing community-based care.

On the federal side, we recommended better oversight of the data used to set payment rates, as well as the rates' effect on care and other outcomes.

We have also reported on the need for better information on the long-term care workforce. Our podcast covers the types of services these workers provide like help with daily activities such as eating and bathing.

GAO’s Key Reports on Health Care Affordability for Retirees