Most Americans Think Medicare Covers More Than It Does: A 2025 Study Shows Only 26% Have It Right

"The big takeaway is that only 26% of respondents picked the right answer, and that is cause for concern. The correct response, according to TIAA's research summary of the survey, is that Medicare covers roughly two-thirds of retiree healthcare costs, leaving the rest to premiums, copays, deductibles, prescriptions, dental, vision, hearing, and long-term care. The other 74% of respondents either overestimated the program's reach or admitted they did not know."

"The financial size of the remaining one-third is the part most pre-retirees miss. Fidelity's 24th annual retiree health care estimate, published in 2025, projects that a 65-year-old retiring today could spend roughly $172,500 on health care over the course of retirement, and that figure is per person, not per couple. It also excludes long-term care, which Medicare does not pay for in any extended form."

"Healthcare has surged to become the second-largest services spending category in the U.S. economy, trailing only housing at $3,741.3 billion as of March 2026. This massive footprint accounts for roughly 24.8% of all services spending. Meanwhile, Medicare transfer receipts to households jumped from $1,172.6 billion in Q1 2025 to $1,301 billion in Q1 2026. While the program is pumping out more cash, the share it covers per beneficiary remains static."

A survey asked how much Medicare covers of typical retiree healthcare expenses. Only 26% selected the correct estimate that Medicare covers roughly two-thirds of costs. The remaining 74% either overestimated Medicare’s coverage or did not know the correct amount. Medicare leaves retirees responsible for premiums, copays, deductibles, prescriptions, dental, vision, hearing, and long-term care. A separate estimate projects that a 65-year-old retiring today could spend about $172,500 on healthcare during retirement per person, excluding long-term care. Healthcare spending is a major part of the U.S. economy, and Medicare transfer receipts to households increased, while the share covered per beneficiary stayed static, increasing planning risk for households with incorrect expectations.

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