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Disability: Economic Costs and Insurance Protection

Health Care Cost Coverage

Disability presents an additional disadvantage for security in retirement in that it is likely to be associated with extraordinary (compared to nondisabled individuals of the same age) medical care expenses and to require costly physical care that a nondisabled retiree does not face. If these additional expenses were incurred during working years but were not covered by health insurance, the individual's ability to save for retirement would have been further limited. When other family members provide unpaid services, these added responsibilities may reduce the care-taker's market earnings, and consequent savings that the disabled individual could share in retirement. Further, disabled workers not covered by employer-provided health insurance are forced into the individual insurance market, where coverage may be denied, premiums may be higher because of their greater health risks, or coverage may be limited by preexisting condition clauses.

Health insurance is important for the treatment and management of chronic conditions; its absence may contribute to the association between chronic conditions and economic status. SSDI beneficiaries are covered by Medicare following 24 consecutive months of benefit receipt. These individuals may purchase "Medigap" insurance, although out-of-pocket costs for these supplementary policies may limit purchase. Clearly, health insurance coverage is important to the treatment of chronic conditions, yet health insurance coverage is less likely among the disabled than among their healthy peers. Absence of coverage reduces the probability of effective treatment and management of work-limiting chronic conditions. Consider two of the most common chronic conditions among the elderly: arthritis, affecting almost half of all elderly people in the United States, and hearing loss, affecting 22 million people. Among persons between the ages of forty-five and sixty-four with arthritis, only 46 percent have private insurance, compared to 80 percent of those without arthritis. Hearing loss can be effectively treated with hearing aids, yet two out of three persons who are sixty-five or older and have hearing loss do not use hearing aids, in part a consequence of Medicare not covering hearing aids.



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Additional topics

Medicine EncyclopediaAging Healthy - Part 1Disability: Economic Costs and Insurance Protection - The Economics Of Disability, Work Withdrawal By Older Disabled Workers, Disability Insurance: General Policy Features