Older Adults' Living Expenses and the Adequacy of Income Allowances for Medicaid Home and Community-Based Services

08/01/2016

Richard W. Johnson and Stephan Lindner

Urban Institute

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ABSTRACT

This brief assesses the adequacy of the income allowances granted to older Medicaid HCBS enrollees and their spouses. We measure household expenditures made by older households and compare them to the Medicaid HCBS income allowances provided by the state in which they reside, to see how much they would have to reduce their spending if they enrolled in Medicaid HCBS and did not allow their expenses to exceed those income allowances. The results show that 48% of low and moderate-income households headed by an adult age 65 or older spent more than their state's Medicaid HCBS income allowances in 2009, and 29% spend at least 50% more than the allowances. Single adults are more likely that couples to spend more than they would be allocated by Medicaid HCBS, because spousal income allowances are generally much larger than the maintenance needs allowances provided to Medicaid HBCS enrollees. These findings suggest that some states do not allow Medicaid HCBS enrollees to retain enough income to cover community living expenses, potentially limiting access to the program. Raising Medicaid HCBS income allowances could enable more older adults with disabilities to remain in the community and receive the care they need.

DISCLAIMER: The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.


 

Since Medicaid's inception, the joint federal-state program has always covered nursing home care for people with disabilities and very limited income and financial resources who are unable to live independently. Medicaid home and community-based services (HCBS) are provided at state option. Although Medicaid spending on HCBS for working-age adults with disabilities has surged over the past decade, the growth of Medicaid HCBS for older adults has been much slower. Medicaid's financial eligibility rules for elders receiving HCBS may help explain why state Medicaid programs have been comparatively much less successful in reorienting long-term services and supports (LTSS) spending for older Americans away from institutional care toward HCBS than they have been for LTSS spending on younger people with disabilities, including those with intellectual developmental disabilities whose use of institutional care has declined dramatically, nationwide, and almost disappeared in some states.

Most states allow Medicaid recipients of HCBS who have monthly incomes above the federal poverty level (FPL) to keep at least some of that excess income to facilitate their continued residence in the community. However, the fact that these income allowances, which vary by state, are generally small raises concerns that many older people with disabilities who qualify for Medicaid HCBS are unable to cover their housing costs and other expenses related to living in the community. This brief assesses the adequacy of the income allowances granted to older Medicaid HCBS enrollees and their spouses. We measure household expenditures made by older households and compare them to the Medicaid HCBS income allowances provided by the state in which they reside to see how much they would have to reduce their spending if they became disabled and enrolled in Medicaid HCBS.

We find that households headed by adults ages 65 and over with incomes below 400 percent of the FPL spent about $28,000 in 2009. We divided spending into essential and nonessential categories, with essential spending being 85 percent of total spending. Housing expenses were 43 percent of total spending. Food and health care accounted for 16 percent and 15 percent of total spending, respectively. Nonessential spending (15 percent of total spending) includes spending for leisure activities, but also spending for clothing and personal care.

The results show that 48 percent of low-income and moderate-income households headed by an adult age 65 or older spent more than their state's Medicaid HCBS income allowances in 2009, and 29 percent spent at least 50 percent more than the allowances. Single adults are more likely than couples to spend more than they would be allocated by Medicaid HCBS, because spousal income allowances are generally much larger than the maintenance needs allowances provided to Medicaid HBCS enrollees. These findings suggest that some states do not allow Medicaid HCBS enrollees to retain enough income to cover community living expenses, potentially limiting access to the program. Raising Medicaid HCBS income allowances could enable more older adults with disabilities to remain in the community and receive the care they need.

 

Medicaid has always covered nursing home care for people with disabilities and very limited income and financial resources who are unable to live independently. Over the past decade, however, Medicaid spending on HCBS for people with disabilities has dramatically increased, spurred partly by the U.S. Supreme Court's 1999 Olmstead decision that requires states to provide alternatives to institutional care when they are appropriate and can be reasonably accommodated.1 However, the re-balancing of Medicaid expenditures on LTSS away from institutions toward HCBS has been much slower and less successful for older adults (aged 65+) than it has been for younger persons with disabilities. Medicaid's financial eligibility rules for elders receiving HCBS help explain why Medicaid's "institutional bias" has persisted for LTSS for older Americans after having been largely overcome for younger people with disabilities.

Most people under age 65 who need LTSS qualify financially for Medicaid coverage because they are receiving cash assistance (e.g., Supplemental Security Income [SSI]) payments or because their income does not exceed the FPL. Although it may be difficult for them to cover food, housing, and other basic living costs in the community, receiving HCBS does not affect how much they have available to do so because Medicaid rules do not require them to contribute any of their monthly income toward the cost of HCBS. In contrast, most older Americans with chronic disabilities are not quite so poor. Even though their Social Security or other pension benefits may give them monthly incomes only slightly above the official poverty line, their eligibility for Medicaid may require ongoing spend-down in the form of post-eligibility contributions to help defray the cost of their nursing home care or HCBS. Because Medicaid covers almost all nursing home costs, including room and board charges, Medicaid residents are rarely permitted to retain more than $30-50 per month as a "personal needs allowance." In contrast, Medicaid does not cover the basic living costs of community-dwelling elderly and disabled Medicaid beneficiaries. For HCBS to be a viable alternative to nursing home care, HCBS recipients must be able to afford those costs. Accordingly, most states allow Medicaid recipients of HCBS who have monthly incomes above the poverty line to keep at least some of that excess income to facilitate their continued residence in the community. However, these income allowances, which vary by state, are generally relatively small, raising concerns that many older people with disabilities who qualify for Medicaid HCBS are unable to cover their housing costs and other living expenses.

This brief assesses the adequacy of the income allowances granted to older Medicaid HCBS enrollees and their spouses. We measure household expenditures made by older persons living in the community and compare them to the Medicaid HCBS income allowances provided by the state in which they reside, to see how much they would have to reduce their spending if they enrolled in Medicaid HCBS and did not allow their expenses to exceed those income allowances. The results show that 48 percent of low-income and moderate-income households headed by an adult age 65 or older spent more than their state's Medicaid HCBS income allowances in 2009, and 29 percent spent at least 50 percent more than the allowances. Single adults are more likely than couples to spend more than they would be allocated by Medicaid HCBS because spousal income allowances are generally much larger than the maintenance needs allowances provided to Medicaid HBCS enrollees. These findings suggest that some states do not allow Medicaid HCBS enrollees to retain enough income to cover community living expenses. Raising Medicaid HCBS income allowances could enable more older adults with disabilities to remain in the community and receive the care they need.

 

How Medicaid Home and Community-Based Services Work

Many people develop disabilities and need assistance with personal care as they move through old age. Estimates of the size of the older population needing LTSS vary across datasets and definitions of LTSS needs (Freedman et al. 2013). In this paper we focus on Medicaid HCBS provided through 1915(c) waivers, which require at least a nursing home level of disability. Recent projections indicate that 52 percent of adults turning 65 in 2015 will need assistance before they die with two or more activities of daily living--eating, toileting, transferring, bathing, dressing, and continence--or will need substantial supervision because of severe cognitive impairment (Favreault and Dey 2015).

Family members provide most of the care received by older adults with disabilities (Johnson and Wiener 2006; Spillman et al. 2014). Nonetheless, many older adults living in the community receive help from paid caregivers. According to unpublished Urban Institute analysis of National Long-Term Care Survey data, nearly a quarter of adults ages 65 and older with significant disabilities received paid help in 2004. That share is likely to grow over time as more women in their 50s and 60s--who provide the bulk of unpaid care--work for pay and have less time to provide care to their frail parents (Johnson, Toohey, and Wiener 2007).

Paid home care is often expensive. In 2015, the median cost of home health aide services was $20 per hour (Genworth 2015), which translates into an annual cost of more than $14,000 for someone receiving 60 hours of paid care per month, the median amount of formal home care (Johnson and Wiener 2006). Medicare covers only medically necessary services, and standard health insurance policies do not generally cover home care. Private long-term care insurance usually provides coverage, but few older adults hold such polices (Johnson 2016).

For low-income and moderate-income older adults with disabilities, Medicaid can be an important payer of home care. Most Medicaid HCBS is provided through special state-run waiver programs approved by the U.S. Department of Health and Human Services (HHS). More than 300 HCBS waiver programs are currently operating, covering the District of Columbia and nearly every state (HHS 2015). HCBS waiver enrollees must satisfy financial and level of care criteria, both of which vary across states. Federal law requires that states limit HCBS participation to people who meet the institutional level of care criteria, which in turn requires that nursing home care be "medically necessary." However, states have wide latitude in interpreting the medically necessary criteria (O'Brien 2005). Ten HCBS waiver programs--3 percent of all such programs--use stricter functional eligibility criteria than the criteria used for institutional care (Ng et al. 2014).

As a need-based program, every Medicaid HCBS waiver program imposes strict income and resource limits on participants. State waiver programs generally restrict eligibility to people with no more than $2,000 in countable assets if single and no more than $3,000 in countable assets if married (HHS 2010). Countable assets exclude the value of the home and such things as automobiles, household goods, the surrender value of life insurance, and burial funds.

The income eligibility rules for Medicaid HCBS waivers are more complicated. SSI beneficiaries are generally eligible, but SSI serves only the most impoverished population. A single SSI beneficiary without earnings who does not receive a state supplement could receive no more than $741 in monthly income in 2014 (equivalent to $8,890 per year), well below the 2014 FPL of $11,670 for adults ages 65 and older.2 Eleven states that had their own old-age income assistance programs before SSI was created in 1972 tie Medicaid HCBS eligibility to the more restrictive income eligibility criteria that determine eligibility for those programs. Other states raised Medicaid income eligibility thresholds to 100 percent of FPL. Additionally, many states, including all of the so-called 209(b) states that use the lower-income eligibility thresholds, account for individuals' health care spending when determining eligibility by subtracting Medicaid applicants' out-of-pocket costs for medically necessary services and supplies from their countable income. This adjustment essentially allows people to "spend down" their income until they qualify for Medicaid. Other states achieve similar outcomes by allowing applicants to assign that portion of their income that exceeds the Medicaid income threshold to a special trust used to help cover service costs. The state receives any funds remaining in these so-called Miller trusts after the Medicaid enrollee's death, up to the amount the state paid in Medicaid benefit (HHS 2010).

Because many middle-class families enrolled in Medicaid HCBS waiver programs would have trouble covering the expenses of community living with the income allowed under their state Medicaid program, most states provide Medicaid HCBS enrollees with special income allowances. For example, states are allowed to enroll individuals with total incomes as high as 300 percent of the maximum SSI benefit in Medicaid HCBS waiver programs, an option that 40 states and the District of Columbia exercised in 2009 (Walker and Accius 2010).3 People who enroll in Medicaid through the 300 percent of SSI option must pay for part of their services, which can be quite expensive. Nearly all states, however, allow waiver enrollees to keep a certain amount of their income each month to cover living expenses. In 2009, these monthly maintenance needs allowances ranged from $625 to $2,022 (Walker and Accius 2010). Most states also reserve income for spouses of HCBS waiver enrollees, to protect them from financial hardship. These spousal needs allowances ranged from $1,821 to $2,739 in 2009 (Walker and Accius 2010). If a spouse's income falls short of the allowance, the Medicaid enrollee may transfer some income to his or her spouse to make up the shortfall (HHS 2010).

The reach and effectiveness of Medicaid HCBS waiver programs depend crucially on the adequacy of the income allowances they provide to enrollees and their spouses. If maintenance needs allowances and spousal income allowances are too low to cover typical housing costs and the other expenses of community living, then few middle-income (and even lower-income) families could afford to enroll in Medicaid HCBS waiver programs. This study explores the adequacy of Medicaid HCBS income allowances for older adults by comparing them to household spending by adults ages 65 and older in a nationally representative household survey.

 

Data and Sample

Our data come from the Health and Retirement Study (HRS), a longitudinal survey of older Americans conducted by the Survey Research Center at the University of Michigan. The HRS collects detailed information every two years on demographics and health status, as well as comprehensive income and asset data. The companion Consumption and Activities Mail Survey (CAMS) asks a subset of HRS respondents about their expenses over the past 12 months.4 Conducted in the years that the full HRS was not administered, it collects information on a wide array of expenses that reflect the cost of living in the community. We base our analysis on the 2009 CAMS, which was completed by 3,514 households, linked to demographic information (e.g., gender, age, disability status) from the 2008 HRS and household income information from the 2010 HRS, which collects 2009 income data. The restricted-access version of the HRS that we are using for this study also identifies respondents' state of residence, which allow us to link respondents to information about maintenance needs allowances and spousal income allowances.

CAMS collects detailed expenditure data for 38 spending categories, asking respondents how much they spent over the past month or week. We annualize this information by multiplying weekly estimates by 52 and monthly estimates by 12, and we group the 38 expenditure items into the following cost categories: shelter, utilities, home maintenance, housekeeping and gardening, durable goods purchases, food, health care, transportation, personal items, and other expenditures. Although most expenditure data collected by CAMS refer to household spending, some refer to individual spending including expenditures on clothing and apparel, personal care products and services, drugs, health services, medical supplies, tickets for movies, sporting events, and other performances, and hobbies and leisure equipment refer to individual spending. Because only one household member responds to the CAMS questionnaire, the survey likely misses some household spending on these items. To obtain a more complete estimate of household spending, we impute personal expenditures on these items for the spouses of married respondents in CAMS. The imputations are based on regression models that control for the spouse's age and its square, household income relative to the FPL, and indicators for the spouse's sex, race, ethnicity, marital status, and disability status.

We consider the expenditures reported in CAMS, except for those in the personal items and other categories, to be essential for independent living in the community. Spending on personal and other items consists primarily of clothing, entertainment, and charitable contributions, and we consider these to be nonessential. Table 1 provides details on the expenditure categories.

TABLE 1. Composition of Expenditure Categories
Category Item
Essential Housing, durable goods, food, health care, transportation
Nonessential Personal, other
Housing Shelter, utilities, home maintenance, housekeeping and gardening
Shelter Mortgage, rent, property taxes, homeowners' and renters' insurance
Utilities Electricity, water, heat, phone/cable/Internet
Home maintenance Home repairs and maintenance
Housekeeping and gardening Household furnishings and equipment, housekeeping supplies and services, gardening and yard supplies and services
Durable goods Refrigerator, washer/dryer, dishwasher, television, computer
Food Food and drink purchased at stores, meals eaten outside the home
Health Health insurance, drugs, health services, medical supplies
Transportation Vehicle insurance, vehicle maintenance, car payments (interest and principal), gasoline
Personal Clothing and apparel, personal care products and services
Other Trips and vacations, tickets (movies, sporting events, etc.), charitable contributions, gifts, sports equipment, hobbies/leisure equipment
SOURCE: Authors' computations from the 2009 CAMS.

To gauge the accuracy of the CAMS data, we compare reported household spending at older ages in the survey with spending in the Bureau of Labor Statistics' (BLS) Consumer Expenditure Survey (CEX), used to compute the consumer price index and generally considered the premier data source on spending by United States households. Mean 2009 household spending by adults ages 65 and older is $34,350 in CAMS/HRS, compared with $37,560 in CEX (Table 2). The distribution of expenditures across spending categories is also similar in the two surveys, suggesting that household spending estimates based on CAMS data are likely to reflect actual spending by older households. However, because overall household expenditures are slightly lower in CAMS than CEX, our analysis may somewhat overstate the capacity of HCBS income allowances to cover community-based living expenses.

Using state identifiers available in a restricted version of the HRS data to which we have access, we link CAMS/HRS respondents to Medicaid HCBS income allowances permitted by the state in which they reside. Maintenance income allowances and spousal income allowances are for 2009 and come from Walker and Accius (2010).

TABLE 2. Distribution of Annual Household Expenditures, 2009
(households headed by adults ages 65 and older)
  CAMS CEX
Average total expenditures ($) 34,350 37,560
Percent of total expenditures
Essential 80.9 76.2
   Housing 40.6 35.1
      Mortgage 6.9 4.2
      Rent 5.3 5.5
      Property taxes 4.6 4.8
      Maintenance, repairs, and insurance 5.9 4.6
      Utilities 13.1 8.7
      Housekeeping, gardening 4.8 7.3
   Durable goods 1.0 ---
   Food 14.3 13.8
   Health care 15.2 12.9
   Transportation 9.8 14.4
Nonessential 14.7 19.5
   Personal 4.3 4.2
   Other 14.7 19.5
SOURCE: Authors' computations from the 2009 CAMS and published CEX data.
NOTE: CEX expenditures are from published BLS tabulations for households whose reference person is age 65 or older (http://www.bls.gov/cex/2009/share/age.pdf). The BLS tabulations include home maintenance expenses in shelter costs and durable goods expenses in housekeeping expenses. They also include other lodging in shelter, which we assign proportionately to mortgage and rent expenses. In the CEX tabulations, we label food and alcohol as food; household operations, housekeeping supplies, and household furnishing as housekeeping and gardening; apparel and personal care services as personal; and entertainment, reading, education, tobacco, cash contributions, personal insurance, pension, and miscellaneous expenses as other.

We restrict our sample to adults age 65 or older living in the community (not in nursing homes). We drop from the sample married adults with spouses younger than 65 in order to lessen the complications to the analysis that might occur with working spouses or dependent children. Additionally, we eliminate households with incomes in excess of 400 percent of FPL to focus on low-income adults--with household incomes no more than 200 percent of FPL--and moderate-income adults--with household incomes above 200 percent of FPL but no more than 400 percent of FPL--who might participate in Medicaid HCBS. Spending by low-income and moderate-income households is also more likely to represent necessary expenditures than spending by high-income households. About three-quarters of all older households in the HRS report incomes below this level, which corresponds to $41,156 for an older single adult and $51,872 for an older couple in 2009 (and $45,416 for a single older adult and $57,236 for an older couple in 2014). Finally, we drop households with unreasonably high spending (more than $100,000) in any single category, those who are missing data on demographics, disability status, and household income, and those who do not report any household income or expenditures. The analysis is conducted at the household level and we use household weights so that our results represent outcomes for the general older population.5 The final sample includes 1,292 households (Table 3).

TABLE 3. Sample Exclusions and Final Sample Size
Category Number of Remaining Households in the Sample
Completed 2009 CAMS questionnaire 3,514
Drop respondents who:
Are not interviewed in the 2008 and 2010 HRS 3,439
Do not live in the community 3,235
Are younger than age 65 or have a spouse younger than 65 2,106
Report spending more than $100,000 in a single category 2,092
Are missing data on demographics, disability, or income 1,800
Report household income of at least four times the FPL 1,312
Report no household income or expenditures 1,292
SOURCE: Authors' computations from the 2009 CAMS, linked to the 2008 and 2010 HRS.

We estimate mean and median expenditures for the households in our sample and relate spending to household income. We also compute the share of households that spend more than the maintenance needs allowances and spousal income allowances provided by Medicaid HCBS waiver programs in their state, and estimate how much their spending exceeds those allowances. We compare spending to a state's maintenance needs allowance for households headed by a single adult, and we compare spending to a state's maintenance needs allowance plus spousal income allowance for households headed by married adults.

Our results show how outcomes vary by key household characteristics, including household income relative to FPL, age, disability status, marital status, homeownership, and income allowances in each respondent's state. For married households, we set the age of the household equal to the mean age of the two spouses. We classify a household as disabled if either spouse reports, because of a health or memory problem, difficulty with an activity of daily living--bathing or showering, eating, dressing, walking across a room, getting in and out of bed, or using the toilet--or an instrumental activity of daily living--shopping for groceries, preparing a hot meal, using the telephone, managing money, taking medications, or reading a map--that is expected to last three or more months.

About a third of households in our sample include adults with disabilities, nearly half are headed by adults age 75 or older, and two-thirds are headed by a single adult (Table 4). About half (51 percent) of households have incomes that fall below 200 percent of FPL, and 12 percent have incomes that fall below 100 percent of FPL. Three-quarters own their homes. Older households headed by single adults and those with disabilities are more likely to be impoverished and less likely to own their homes than their counterparts headed by married adults. Forty-five percent of households in our sample are located in states that allow spouses of Medicaid HCBS waiver program enrollees to retain incomes of at least $50,000 per year, and 53 percent are in states that provide maintenance income allowances of $24,264 per year, the maximum amount in 2009. However, 25 percent of households are located in states that allow Medicaid HCBS enrollees to keep no more than $10,000 per year to cover living expenses, and 8 percent are in states that allow spouses of Medicaid HCBS enrollees to keep no more than $10,000 per year.

TABLE 4. Sample Characteristics (%)
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  All Not Married With Disabilities
Household income relative to FPL
   Less than 100% 12.1 16.5 14.9
   100%-199% 39.2 44.0 39.9
   200%-299% 27.9 24.4 27.5
   300%-399% 20.8 15.3 17.8
Age
   65-74 51.5 47.1 46.4
   75-84 37.3 37.8 36.1
   85 or older 11.2 15.1 17.5
With disabilities 33.5 31.5 100.0
Not married 66.6 100.0 62.5
Homeowner 75.1 66.8 71.1
Renter 26.9 33.9 29.6
Annual maintenance needs allowance in state
   $10,000 or less 25.1 25.1 10.0
   $10,001-$15,000 11.0 10.5 11.0
   $15,001-$24,236 11.3 11.4 35.1
   $24,264 52.6 53.0 43.8
Annual maintenance needs allowance and spousal income allowance in state
   $10,000 or less 8.4 9.3 25.5
   $10,001 to $$29,999 13.5 12.9 11.3
   $30,000 to $50,000 33.1 32.7 11.8
   More than $50,000 45.0 45.1 51.4
Number of observations 1,292 806 458
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample excludes households headed by an adult with a spouse younger than 65. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. The table refers to the maintenance needs and spousal income allowances provided by the state in which each household is located.

 

Results

Low-income and moderate-income households headed by adults ages 65 and older averaged $28,110 in household expenditures in 2009 (Table 5). Expenditures rise with household income, as households with incomes between 300 percent and 399 percent of FPL spend about twice as much, on average, as those with incomes below 100 percent of FPL. Average expenditures fall as households grow older. Married households spend 68 percent more, on average, than single households, but they spend less on a per capita basis. Homeowners spend more than renters, and households headed by an adult with disabilities spend more than households headed by an adult without disabilities. Median household spending was $23,550, less than mean spending because some households have very high expenditures, even among those with incomes below 400 percent of FPL.

TABLE 5. Household Expenditures by Household Characteristics, 2009 ($)
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Total Household Expenditures Essential Household Expenditures
Mean Median Mean Median
All 28,110 23,550 23,740 20,070
Household income relative to FPL
   Less than 100% 17,090 12,390 14,940 11,010
   100%-199% 24,790 19,960 21,410 17,110
   200%-299% 32,680 27,800 27,370 23,200
   300%-399% 34,680 31,520 28,390 26,330
Age
   65-74 30,260 27,160 25,750 23,300
   75-84 26,680 21,370 22,350 18,280
   85 or older 22,980 17,830 19,100 14,970
With disabilities 26,930 23,010 23,320 19,560
Not married 22,930 19,300 19,850 16,340
Married 38,440 34,800 31,490 28,630
Homeowner 30,640 26,620 25,640 22,470
Renter 23,580 18,980 20,700 15,940
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. Essential expenditures exclude spending on clothing, personal care products and services, trips and vacations, tickets, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities.

Average spending on essential items, which exclude clothing, personal care products and services, trips and vacations, tickets to performance events, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities, totaled $23,740 in 2009, about $4,400 less than total spending. Median household spending on essential items was $20,070. Differences in spending by household characteristics are similar for essential items and all items combined.

Housing costs account for 43.4 percent of spending by low-income and moderate-income households headed by adults ages 65 and older, split between shelter costs (mortgage, rent, property taxes, and insurance), utilities, home maintenance, and housekeeping and gardening expenses (Table 6). Food accounts for another 16.3 percent of household expenditures, health care accounts for 14.8 percent, and transportation accounts for 10.1 percent. Nonessential items account for 14.4 percent of spending by older households.

TABLE 6. Breakdown of Mean Household Expenditures by Spending Category, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
Spending Category Level
($)
% of Total
Total 28,110 100.0
   Essential 23,740 85.6
      Housing 11,770 43.4
         Shelter 5,390 19.9
            Mortgage 1,750 4.7
            Rent 1,880 8.9
            Property taxes 1,190 4.0
            Insurance 580 2.3
         Utilities 3,920 15.3
         Home maintenance 1,150 3.4
         Housekeeping, gardening 1,310 4.8
      Durable goods 280 1.1
      Food 4,330 16.3
      Health care 4,500 14.8
      Transportation 2,860 10.1
   Nonessential 4,370 14.4
      Personal 1,130 4.4
      Other 3,240 10.0
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65.

The distribution of household expenditures differs for certain groups. For example, housing costs represent a larger share of spending by households headed by single older adults than those headed by married older adults, primarily because single households spend more on rent (Table A-1). Households headed by older adults with disabilities devote a larger share of their spending to health care than those headed by adults without disabilities. Single older households and disabled older households allocate a smaller share of their spending to nonessential items than other older households. Moderate-income older households devote a larger share of their spending to nonessential items then low-income older households and smaller shares to food and especially housing (Table A-2). For example, housing costs account for 50.7 percent of spending for households with incomes less than 100 percent of FPL, compared with 38.0 percent for households with incomes between 300 percent and 399 percent of FPL. And households headed by adults ages 85 and older devote a larger share of their spending to health care than households headed by adults ages 65-74 (Table A-3).

Older households with incomes below 400 percent of FPL spend about all of their income each year. The median ratio of total household expenditures to household income was 103 percent in 2009, indicating that half of older households in our sample spent more than 103 percent of their income (Table 7). Older households can finance spending that exceeds their income by dipping into their savings, taking on more debt, or obtaining financial help from family members. The median ratio of essential household spending to household income was 88 percent. Low-income older households generally spend a greater share of their income than moderate-income older households, while households headed by adults ages 85 and older spend a smaller share than households headed by adults ages 65-84.

TABLE 7. Median Household Income and Expenditures Relative to Income, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Total Household Income
($)
Total Expenditures
as % of Income
Essential Expenditures
as % of Income
All 21,310 103 88
Household income relative to FPL
   Less than 100% 9,000 131 114
   100%-199% 16,800 116 100
   200%-299% 27,850 103 81
   300%-399% 40,380 82 65
Age
   65-74 23,650 106 92
   75-84 20,150 100 85
   85 or older 18,320 94 77
With disabilities 20,020 108 94
Not married 17,500 101 87
Married 32,220 107 88
Homeowner 24,490 105 87
Renter 16,870 103 93
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. Essential expenditures exclude spending on clothing, personal care products and services, trips and vacations, tickets, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities.

In 2009, nearly half--48 percent--of low-income and moderate-income households headed by adults age 65 and older spent more than the maintenance needs allowances and spousal income allowances granted by their state's Medicaid HCBS waiver programs, and 29 percent of these households exceeded those limits by at least 50 percent (Table 8). Spending by moderate-income households is more likely to exceed the allowances threshold than spending by lower-income households; 55 percent of older households with incomes between 200 percent and 299 percent of FPL spend more than their state's Medicaid HCBS allowances. Nonetheless, 45 percent of households with incomes between 100 percent and 199 percent of FPL and 34 percent of households with incomes below 100 percent of FPL also spend more than their state's allowances. Single adults are much more likely than married adults to spend more than the allowances (57 percent versus 33 percent) because spousal income allowances are generally much larger than the maintenance needs allowances granted to waiver enrollees. Spending by homeowners is also more likely than spending by renters to exceed the Medicaid HCBS allowances. It is not surprising that households in states with the smallest allowances are most likely to exceed those spending thresholds. For example, 81 percent of households in states that grant maintenance needs allowances of no more than $10,000 per year and 90 percent of households in states that grant spousal income allowances of no more than $10,000 per year spend more than the HCBS allowances. However, spending exceeds HCBS allowances for 32 percent of households located in states with the largest 2009 allowances--maintenance needs allowances of $24,264 per year and spousal income allowances of more than $50,000 per year.

TABLE 8. Percentage of Households Spending More than the Maintenance Needs and Spousal Income Allowances in Their State, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Total Spending Exceeds Allowances by: Essential Spending Exceeds Allowances by:
Any
Amount
25%
orMore
50%
orMore
100%
orMore
Any
Amount
25%
orMore
50%
orMore
100%
orMore
All 48 35 29 17 39 29 22 13
Household income relative to FPL
   Less than 100% 34 24 21 11 30 20 17 8
   100%-199% 45 33 27 13 38 27 20 10
   200%-299% 55 41 31 23 42 33 26 17
   300%-399% 54 37 32 23 41 33 23 15
Age
   65-74 51 36 29 16 41 31 22 13
   75-84 43 32 28 19 35 27 22 13
   85 or older 53 38 28 17 42 28 22 10
With disabilities 44 32 25 16 36 28 20 12
Not married 57 43 35 22 48 36 27 16
Married 33 19 16 9 21 15 11 6
Homeowner 52 36 30 19 40 31 23 14
Renter 44 34 28 15 37 29 20 11
Annual maintenance needs allowance in state
   $10,000 or less 81 71 63 47 74 64 55 38
   $10,001-$15,000 64 43 32 17 51 36 23 11
   $15,001-$24,236 39 25 19 6 30 20 12 1
   $24,264 32 18 14 6 21 14 8 3
Annual maintenance needs allowance and spousal income allowance in state
   $10,000 or less 90 81 71 52 86 71 63 42
   $10,001-$29,999 61 48 40 27 52 40 32 20
   $30,000-$50,000 56 42 35 21 47 37 27 15
   More than $50,000 32 17 13 6 20 13 8 3
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. The table refers to the maintenance needs and spousal income allowances provided by the state in which each household is located. Essential expenditures exclude spending on clothing, personal care products and services, trips and vacations, tickets, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities.

Households are less likely to spend more than their state's Medicaid HCBS income allowances when we consider only essential expenditures, excluding spending on clothing, personal care products, vacations, entertainment, and charitable contributions. Nonetheless, 39 percent of low-income and moderate-income households headed by adults ages 65 and older spend more on essential items than the Medicaid HCBS allowances granted by their states, and 22 percent exceed those spending amounts by more than 50 percent. Spending on essential items exceeds Medicaid HCBS maintenance needs allowances for 48 percent of single adults ages 65 and older with low and moderate-incomes.

Because households headed by a single older adult--which account for two-thirds of all older households with incomes less than 400 percent of FPL--are especially likely to spend more than Medicaid HCBS maintenance needs allowances, we explore their spending levels in more detail. Household spending exceeds maintenance needs allowances for 72 percent of single older adults with incomes between 200 percent and 299 percent of FPL, 50 percent of single older adults with incomes between 100 percent and 199 percent of FPL, and 36 percent of single older adults with incomes below 100 percent of FPL to prevent their expenses from exceeding their income (Table 9). Household spending exceeds Medicaid HCBS maintenance needs allowances for nearly four in ten single adults--39 percent--who live in a state with the most generous allowances--$24,264 per year in 2009. Even when we consider only essential spending, 54 percent of single older homeowners and 59 percent of single older adults with incomes between 200 percent and 299 percent of FPL spend more than Medicaid HCBS maintenance needs allowances.

TABLE 9. Percentage of Unmarried Households Spending More than the Maintenance Needs and Spousal Income Allowances in Their State, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Total Spending Exceeds Allowances by: Essential Spending Exceeds Allowances by:
Any
Amount
25%
or More
50%
or More
100%
or More
Any
Amount
25%
or More
50%
or More
100%
or More
All 57 43 35 22 48 36 27 16
Household income relative to FPL
   Less than 100% 36 26 23 12 32 22 18 9
   100%-199% 50 36 29 14 42 30 22 11
   200%-299% 72 57 45 33 59 48 38 26
   300%-399% 73 56 47 36 62 51 36 22
Age
   65-74 62 47 38 23 54 42 30 18
   75-84 49 39 33 23 42 32 26 16
   85 or older 54 39 29 15 43 29 21 9
With disabilities 53 41 32 20 47 36 26 15
Homeowner 65 48 41 25 54 42 32 19
Renter 46 36 29 16 40 31 22 12
Annual maintenance needs allowances in state
   $10,000 or less 88 80 72 56 84 73 66 46
   $10,001-$15,000 76 61 47 25 72 53 35 17
   $15,001-$24,236 50 36 27 10 42 29 18 2
   $24,264 39 23 17 8 27 18 10 5
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 806 unmarried households. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. The table refers to the maintenance needs and spousal income allowances provided by the state in which each household is located. Essential expenditures exclude spending on clothing, personal care products and services, trips and vacations, tickets, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities.

Among low-income and moderate-income older households who spent more in 2009 than their state's Medicaid HCBS income allowances, the median amount by which their spending exceeded the allowances was $10,650, or 65 percent of their allowances (Table 10). Median excess spending was $11,340 for older homeowners, $11,470 for older households with incomes between 200 percent and 299 percent of FPL, and $12,060 for older households in states that provided no more than $10,000 in annual maintenance needs allowances. Levels of spending in excess of Medicaid HCBS allowances were similar for single older adults.

TABLE 10. Median Total Household Expenditures in Excess of Maintenance Needs and Spousal Income Allowances, for Households that Spend More than Those Amounts, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  All Not Married
Level As % of
Allowance
Level As % of
Allowance
All 10,650 65 10,450 71
Household income relative to FPL
   Less than 100% 6,450 59 6,450 60
   100%-199% 9,960 65 9,350 63
   200%-299% 11,470 69 11,470 87
   300%-399% 11,950 65 11,450 91
Age
   65-74 10,960 60 10,820 68
   75-84 11,290 85 11,110 89
   85 or older 6,800 55 6,450 54
With disabilities 9,230 60 9,110 65
Homeowner 11,340 65 10,840 75
Renter 9,910 63 8,790 63
Annual maintenance needs allowances in state
   $10,000 or less 12,060 120 11,110 134
   $10,001-$15,000 7,370 54 8,200 62
   $15,001-$24,236 6,950 44 11,270 61
   $24,264 9,910 37 9,440 39
Annual maintenance needs allowance and spousal income allowance in state
   $10,000 or less 10,650 115 na na
   $10,001-$29,999 11,400 90 na na
   $30,000-$50,000 10,780 69 na na
   More than $50,000 9,030 35 na na
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: Estimates are based on a sample of 604 households (including 450 unmarried households) whose spending exceeds the allowances in their state. Households headed by an adult with a spouse younger than 65 are excluded. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. The table refers to the maintenance needs and spousal income allowances provided by the state in which each household is located.

Spending levels in excess of Medicaid HCBS income allowances are slightly lower when we consider only essential expenditures. For low-income and moderate-income older households spending more than the HCBS allowances, the median excess amount in 2009 was $8,990, or 58 percent of their allowances (Table 11). Median excess essential spending was $9,710 for older homeowners, $10,480 for older households with incomes between 200 percent and 299 percent of FPL, and $10,480 for older households in states that provided no more than $10,000 in annual maintenance needs allowances. As with excess total spending, levels of essential spending in excess of Medicaid HCBS allowances were similar for single older adults.

TABLE 11. Median Essential Household Expenditures in Excess of Maintenance Needs and Spousal Income Allowances, for Households that Spend More than Those Amounts, 2009
(households headed by adults ages 65 and old with incomes below 400% of FPL)
  All Not Married
Level As % of
Allowance
Level As % of
Allowance
All 8,990 58 8,560 58
Household income relative to FPL
   Less than 100% 5,410 57 5,410 57
   100%-199% 8,720 54 7,810 52
   200%-299% 10,480 72 9,980 80
   300%-399% 9,510 71 8,650 82
Age
   65-74 9,290 57 8,990 58
   75-84 10,230 77 8,670 77
   85 or older 5,750 53 5,410 44
With disabilities 7,800 56 7,580 56
Homeowner 9,710 60 9,130 62
Renter 7,340 55 7,260 55
Annual maintenance needs allowances in state
   $10,000 or less 10,480 102 9,130 110
   $10,001-$15,000 5,590 40 6,000 49
   $15,001-$24,236 8,990 49 8,990 49
   $24,264 8,690 36 8,640 36
Annual maintenance needs allowance and spousal income allowance in state
   $10,000 or less 8,560 94 na na
   $10,001-$29,999 9,260 77 na na
   $30,000-$50,000 9,280 58 na na
   More than $50,000 7,940 33 na na
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: Estimates are based on a sample of 479 households (including 385 unmarried households) whose essential spending exceeds the allowances in their state. Essential expenditures exclude spending on clothing, personal care products and services, trips and vacations, tickets, charitable contributions, gifts, and equipment for sports, hobbies, and leisure activities. Households headed by an adult with a spouse younger than 65 are excluded. Homeowner and renter status are not mutually exclusive, because some homeowners rent other properties and some older adults live in their child's or other family member's home without paying rent. The table refers to the maintenance needs and spousal income allowances provided by the state in which each household is located.

 

Conclusions

Nearly half of low-income and moderate-income households headed by adults ages 65 and older would have to reduce their spending upon enrollment in Medicaid HCBS waiver programs to prevent their expenses from exceeding their income because the program's income allowances would not be large enough to cover what they would otherwise spend. Fifty-five percent of older households with incomes between 200 percent and 299 percent of FPL, 45 percent of older households with incomes between 100 percent and 199 percent of FPL, and 34 percent of households with incomes below 100 percent of FPL spend more than their state's Medicaid HCBS allowances. Half of households spending more than their state's allowances would have to cut their expenditures by more than $10,650 for Medicaid's HCBS income allowances to cover their spending. Otherwise, they would have to dip into any available savings, take on more debt, obtain assistance from family members or friends, or forgo Medicaid HCBS.

Single older adults with low and moderate-incomes are nearly twice as likely as their married counterparts to spend more than their state's Medicaid HCBS allowances. Fifty-seven percent of single older adults with incomes below 400 percent of FPL would have to reduce their spending upon enrollment in a Medicaid HCBS waiver program. Spending by single older adults is especially likely to exceed income allowances because single adults do not have access to spousal income allowances and must rely solely upon maintenance needs allowances, which are generally much less generous.

Our findings suggest that some states do not allow Medicaid HCBS enrollees to retain enough income to cover community living expenses, potentially limiting access to the program. Of course, it is difficult to determine how much income people really need to get by in the community. Certainly not all household spending is essential. Nonetheless, the large gap between actual spending and HCBS income allowances, even among impoverished households that make limited expenditures, suggest that many older adults with low-income or moderate-income would have difficulty financing their current standard of living on the income allowances provided by Medicaid HCBS waiver programs. Raising Medicaid HCBS income allowances, especially the program's maintenance needs allowances, could enable more older adults with disabilities to remain in the community and receive the care they need.

 

Endnotes

  1. Between 2001 and 2011, Medicaid HCBS expenditures grew 150 percent, from $22.2 billion to $55.5 billion (Ng et al. 2014).

  2. See http://www.socialsecurity.gov/policy/docs/quickfacts/prog_highlights/RatesLimits2014.html for SSI income limits and https://www.census.gov/hhes/www/poverty/data/threshld/ for federal poverty thresholds. The SSI income thresholds are slightly higher for SSI beneficiaries with earnings, but only a small share of SSI beneficiaries work.

  3. Under this 300 percent of SSI option, in 2014 a single adult could qualify for a Medicaid HCBS waiver program with as much as $2,223 in monthly income (equivalent to $26,676 per year).

  4. The CAMS supplement has been used in other studies to investigate expenditure patterns in retirement (e.g., Butrica, Goldwyn, and Johnson 2005; Hurd and Rohwedder 2003).

  5. The household weights correct for attrition and the oversampling of African Americans, Hispanics, and Florida residents in the HRS.

 

References

Butrica, Barbara A., Joshua H. Goldwyn, and Richard W. Johnson. 2005. Understanding Expenditure Patterns in Retirement. Washington, DC: Urban Institute.

Favreault, Melissa, and Judith Dey. 2015. "Long-Term Services and Supports for Older Americans: Risks and Financing." ASPE Research Brief. Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. https://aspe.hhs.gov/basic-report/long-term-services-and-supports-older-americans-risks-and-financing-research-brief.

Freedman, Vicki A., Brenda C. Spillman, Patti M. Andreski, Jennifer C. Cornman, Eileen M. Crimmins, Ellen Kramarow, James Lubitz, Linda G. Martin, Sharon S. Merkin, Robert F. Schoeni, Teresa E. Seeman, and Timothy A. Waidmann. 2013. "Trends in Late-Life Activity Limitation in the United States: An Update from Five National Surveys." Demography, 50: 661-71.

Genworth. 2015. Genworth 2015 Cost of Care Survey Home Care Providers, Adult Day Health Care Facilities, Assisted Living Facilities and Nursing Homes. Richmond, VA: Genworth Financial Inc.

Hurd, Michael and Susann Rohwedder. 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement." NBER Working Paper No. 9586. Cambridge, MA: National Bureau of Economic Research.

Johnson, Richard W. 2016. Who Is Covered by Private Long-Term Care Insurance? Washington, DC: Urban Institute.

Johnson, Richard W., and Joshua M. Wiener. 2006. A Profile of Frail Older Americans and Their Caregivers. Washington, DC: Urban Institute.

Johnson, Richard W., Desmond Toohey, and Joshua M. Wiener. 2007. Meeting the Long-Term Care Needs of the Baby Boomers: How Changing Families Will Affect Paid Helpers and Institutions. Washington, DC: Urban Institute.

Ng, Terence, Charlene Harrington, MaryBeth Musumeci, and Erica L. Reaves. 2014. Medicaid Home and Community-Based Services Programs: 2011 Data Update. Menlo Park, CA: Henry J. Kaiser Family Foundation.

O'Brien, Ellen. 2005. Long-Term Care: Understanding Medicaid's Role for the Elderly and Disabled. Menlo Park, CA: Henry J. Kaiser Family Foundation. https://kaiserfamilyfoundation.files.wordpress.com/2013/01/long-term-care-understanding-medicaid-s-role-for-the-elderly-and-disabled-report.pdf.

Spillman, Brenda C., Jennifer Wolff, Vicki A. Freedman, and Judith D. Kasper. 2014. Informal Caregiving for Older Americans: An Analysis of the 2011 National Study of Caregiving. Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.https://aspe.hhs.gov/report/informal-caregiving-older-americans-analysis-2011-national-study-caregiving.

U.S. Department of Health and Human Services (HHS). 2010. Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. https://aspe.hhs.gov/understanding-medicaid-home-and-community-services-primer-2010-edition.

U.S. Department of Health and Human Services (HHS). 2015. Home and Community-Based Services 1915(c). Washington, DC: U.S. Department of Health and Human Services. http://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/home-and-community-based-services/home-and-community-based-services-1915-c.html.

Walker, Lina, and Jean Accius. 2010. Access to Long-Term Services and Supports: A 50-State Survey of Medicaid Financial Eligibility Standards. Washington, DC: AARP Public Policy Institute.

Watts, Molly O'Malley, MaryBeth Musumeci,, and Erica Reaves. 2013. How Is the Affordable Care Act Leading to Changes in Medicaid Long-Term Services and Supports (LTSS) Today? State Adoption of Six LTSS Options. Menlo Park, CA: Henry J. Kaiser Family Foundation.

 

Appendix

TABLE A-1. Breakdown of Mean Household Expenditures by Spending Category and Marital and Disability Status, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Not Married Married No Disabilities With Disabilities
Level
($)
% of
Total
Level
($)
% of
Total
Level
($)
% of
Total
Level
($)
% of
Total
Total 22,930 100.0 38,440 100.0 28,710 100.0 26,930 100.0
   Essential 19,850 87.3 31,490 82.2 23,950 84.4 23,320 87.9
      Housing 10,680 47.7 13,940 34.7 12,020 42.8 11,280 44.6
         Shelter 5,050 22.5 6,080 14.7 5,700 20.6 4,780 18.5
            Mortgage 1,310 4.3 2,630 5.6 1,950 5.3 1,330 3.7
            Rent 2,340 12.1 950 2.7 1,840 8.6 1,960 9.6
            Property taxes 910 3.8 1,740 4.4 1,280 4.3 1,010 3.4
            Insurance 490 2.4 770 2.0 640 2.5 480 1.8
         Utilities 3,520 16.7 4,720 12.6 3,840 14.4 4,090 17.2
         Home maintenance 980 3.4 1,490 3.5 1,180 3.5 1,070 3.3
         Housekeeping, gardening 1,140 5.2 1,650 4.0 1,290 4.4 1,340 5.6
      Durable goods 220 1.1 400 1.1 260 1.1 300 1.2
      Food 3,560 16.7 5,850 15.3 4,380 16.2 4,230 16.3
      Health care 3,210 12.3 7,090 19.9 4,270 13.8 4,960 16.8
      Transportation 2,190 9.5 4,210 11.1 3,020 10.6 2,560 9.0
   Nonessential 3,080 12.7 6,950 17.9 4,760 15.6 3,610 12.1
      Personal 730 3.5 1,950 6.2 1,180 4.5 1,050 4.2
      Other 2,360 9.2 5,000 11.7 3,580 11.1 2,560 7.9
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65.

 

TABLE A-2. Breakdown of Mean Household Expenditures by Spending Category and Household Income Relative to the FPL, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Less Than 100% 100%-199% 200%-299% 300%-399%
Level
($)
% of
Total
Level
($)
% of
Total
Level
($)
% of
Total
Level
($)
% of
Total
Total 17,090 100.0 24,790 100.0 32,680 100.0 34,680 100.0
   Essential 14,940 88.0 21,410 87.4 27,370 84.3 28,390 82.5
      Housing 7,700 50.7 10,920 44.7 13,850 42.3 12,960 38.0
         Shelter 3,720 24.5 5,160 21.1 6,080 18.3 5,890 16.9
            Mortgage 960 3.8 1,480 4.4 1,870 4.7 2,550 5.9
            Rent 1,990 16.8 2,260 10.8 1,990 6.7 950 3.8
            Property taxes 500 2.4 870 3.4 1,580 4.8 1,660 4.8
            Insurance 270 1.5 560 2.5 640 2.1 740 2.4
         Utilities 2,720 18.4 3,840 16.1 4,340 14.5 4,210 13.1
         Home maintenance 490 1.8 770 2.8 1,700 4.5 1,490 4.0
         Housekeeping, gardening 760 6.0 1,140 4.7 1,740 4.9 1,370 4.0
      Durable goods 130 0.8 240 1.1 280 1.0 410 1.5
      Food 3,070 17.4 3,880 16.9 4,930 15.4 5,100 15.5
      Health care 2,610 12.4 3,750 14.3 5,130 15.4 6,180 16.6
      Transportation 1,430 6.7 2,620 10.4 3,180 10.4 3,720 11.0
   Nonessential 2,150 12.0 3,380 12.6 5,310 15.7 6,290 17.5
      Personal 800 5.0 960 4.2 1,320 4.5 1,410 4.3
      Other 1,350 7.0 2,420 8.5 3,990 11.1 4,880 13.1
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65.

 

TABLE A-3. Breakdown of Mean Household Expenditures by Spending Category and Age, 2009
(households headed by adults ages 65 and older with incomes below 400% of FPL)
  Ages 65-74 Ages 75-85 Ages 85 and Older
Level
($)
% of
Total
Level
($)
% of
Total
Level
($)
% of
Total
Total 30,260 100.0 26,680 100.0 22,980 100.0
   Essential 25,750 86.3 22,350 85.0 19,100 84.4
      Housing 13,030 43.2 10,560 42.9 10,010 45.4
         Shelter 6,150 20.9 4,390 17.9 5,250 21.8
            Mortgage 2,450 6.5 1,210 3.3 290 1.1
            Rent 1,820 8.4 1,550 8.4 3,220 13.2
            Property taxes 1,270 3.8 1,080 4.1 1,160 4.2
            Insurance 600 2.2 550 2.1 590 3.2
         Utilities 4,300 14.7 3,800 16.1 2,580 15.3
         Home maintenance 1,280 3.5 1,130 3.7 580 2.3
         Housekeeping, gardening 1,300 4.1 1,250 5.3 1,600 6.1
      Durable goods 350 1.1 200 0.9 200 1.6
      Food 4,740 16.8 4,170 16.2 2,960 14.2
      Health care 4,070 13.5 5,030 15.9 4,730 17.5
      Transportation 3,570 11.7 2,390 9.1 1,200 5.8
   Nonessential 4,510 13.8 4,340 15.0 3,890 15.6
      Personal 1,220 4.5 1,090 4.4 900 4.2
      Other 3,290 9.3 3,250 10.6 2,990 11.4
SOURCE: Authors' computations from the 2009 CAMS matched to the 2008 and 2010 waves of the HRS.
NOTE: The sample includes 1,292 households and excludes households headed by an adult with a spouse younger than 65.

 

ABOUT THE AUTHORS:

Richard W. Johnson is a senior fellow in the Income and Benefits Policy Center at the Urban Institute, where he directs the Program on Retirement Policy. His current research focuses on older Americans' employment and retirement decisions, LTSS for older adults with disabilities, and state and local pensions. Recent studies have examined job loss at older ages, occupational change after age 50, and the impact of the 2007-2009 recession and its aftermath on older workers and future retirement incomes. He earned his AB from Princeton University and his PhD from the University of Pennsylvania, both in economics.

Stephan Lindner a research associate in the Income and Benefits Policy Center at the Urban Institute and a senior research association in the Center for Health Systems Effectiveness at the Oregon Health and Science University (OHSU). His research examines social insurance and welfare programs--in particular, Social Security Disability Insurance, Supplemental Security Income, and unemployment insurance. He is interested in how economic circumstances, income sources, and program characteristics influence program participation for displaced and disabled workers. More recently, he has examined efforts to improve cardiovascular disease prevention in primary care clinics. He earned his M.A. and Ph.D. in economics from the University of Michigan.

The authors thank Melissa Favreault for valuable comments on an earlier draft.


Where Do People with Disabilities Live?

This report was prepared under contract #HHSP23320100025W1 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the Urban Institute. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/office-disability-aging-and-long-term-care-policy-daltcp or contact the ASPE Project Officers, John Drabek and Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201; John.Drabek@hhs.gov, Pamela.Doty@hhs.gov.

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