V I E W P O I N T

Improving Medicare Savings Programs and the Low-Income Subsidy: Helping Low-Income Medicare Beneficiaries

The Medicare Savings Programs (MSPs) and the Low-Income Subsidy (LIS) help beneficiaries pay Medicare's out-of-pocket costs.  The Medicare Savings Programs -- Qualified Medicare Beneficiary (QMB) program, Specified Low-Income Medicare Beneficiary (SLMB) program, and the Qualified Individual (QI) program – are Medicaid programs that help Medicare beneficiaries with low incomes and resources pay all or some of Medicare's premiums, deductibles and copayments for Parts A and B hospital and physician services.  The Low-Income Subsidy helps with Part D prescription drug costs.

The Qualified Medicare Beneficiary (QMB) program pays for Medicare's deductibles, copayments and the Part B premium for beneficiaries with incomes below 100 percent of the poverty line, but above the levels that would qualify them for full Medicaid coverage in their state.  The Specified Low-Income Medicare Beneficiary (SLMB) program pays the Medicare Part B monthly premium for beneficiaries with monthly incomes between 100% and 120%.  And, the Qualified Individual ( QI ) program requires state Medicaid programs to administer the payment of Medicare Part B premiums for individuals who are not otherwise eligible for Medicaid and who have incomes between 120% and 135% of federal poverty levels.  Unlike QMB and SLMB, which are entitlement programs, the QI program is funded through a federal block grant whereby the states receive 100% federal money to cover the costs of this benefit.  Funds must be reauthorized each year, which can cause disruptions in providing benefits to eligible individuals.  In addition, once a state's appropriated money is gone, the state is no longer obligated to pay benefits and eligible individuals may be denied access to the program.  For all MSPs, eligible beneficiaries' personal assets cannot exceed $4,000 for an individual or $6,000 for married couples. 

The Low-Income Subsidy helps low-income beneficiaries with Medicare prescription drug costs.  Beneficiaries enrolled in one of the three Medicare Savings Programs are treated as full-subsidy eligible individuals for purposes of the Medicare Part D LIS, regardless of their actual income and resources.  In 2008, their copayments for prescription drugs are limited to $2.25 for generic/preferred drugs and $5.60 for other drugs, and they have no premiums, deductibles, or donut hole gap in coverage.

In addition to Medicare beneficiaries enrolled in the Medicare Savings Programs, the Low-Income Subsidy provides varying degrees of help with Part D prescription drug costs for the following groups of Medicare beneficiaries:  those who are dually eligible for Medicare and Medicaid and Medicare beneficiaries with incomes below 150% of poverty and resources below $11,990 for an individual and $23,970 for a couple.

Unfortunately, many low-income Medicare beneficiaries who could benefit from the MSP and/or LIS are not enrolled or do not qualify.  The reasons for the low enrollment  range from lack of information about the programs, the stigma of applying for MSP at Medicaid/welfare offices, complex enrollment procedures, problems with language or transportation, and asset tests which disqualify those with lifetime savings that are just a little too high.

NATIONAL COMMITTEE POSITION 

•  The most cost-effective and efficient way to help low-income Medicare beneficiaries is to strengthen the Medicare Savings Programs and improve Medicare Part D's Low-Income Subsidy.  This could be paid for by part of the savings that would come from eliminating overpayments to private Medicare Advantage plans. 

•  The National Committee supports efforts to equalize payments between the traditional Medicare program and private Medicare Advantage (MA) plans.   Instead of being paid up to 50 percent more than traditional Medicare, private plans should be paid at a rate equal to the costs of traditional Medicare in every part of country.  Equalized payments would level the playing field, remove private plans' unfair advantage in attracting beneficiaries, and save money.

•  The National Committee supported H.R. 3162, the Children's Health and Medicare Protection (CHAMP) Act of 2007, which reduces overpayments to MA plans and includes substantial improvements to the MSP and LIS programs.  Included in this comprehensive legislation to improve health insurance for both children and seniors are a long list of proposals to help low-income Medicare beneficiaries, including:  increasing the asset limits used in determining eligibility for the MSP and LIS ; making the QI program permanent rather than subject to yearly reauthorization; eliminating the requirement that states recover costs from the estates of low-income seniors who have received Medicaid assistance with Medicare Part B costs; and eliminating Part D late enrollment penalties for individuals eligible for the low-income subsidies.

Government Relations and Policy, April 2008

The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.