Nonadherence to antipsychotic medications is widespread and compromises the outcome of patients with schizophrenia. Using the MarketScan Medicare claims database, this study examined the impact of medication adherence on healthcare utilization among Medicare insured schizophrenia patients. The study population was separated into two cohorts defined by medication adherence, one with a medication possession ratio (MPR) ≥0.7 (high adherence) and the other with a MPR <0.7(low adherence). Of the 354 patients identified, 126 (36 %) had high adherence (mean ± SD MPR 0.94 ± 0.09) and 228 (64 %) had low adherence (MPR 0.24 ± 0.19). All cause hospitalizations (0.68 vs. 0.44; p = 0.015) and length of stay (LOS) (7.0 vs. 2.6 days; p = 0.005), and relapse hospitalizations (0.22 vs. 0.11; p = 0.028) and LOS (3.2 vs. 0.7 days; p = 0.027) were greater among patients with low adherence. Low adherent Medicare insured patients with schizophrenia require significantly more inpatient care and represent a patient population in which effective interventions are needed to improve disease management.