Medicare Savings Programs

Medicare Savings Programs are a set of four programs, run by state Medicaid agencies under 42 U.S.C. 1396a(a)(10)(E), that pay some or all of a low-income Medicare beneficiary's Medicare premiums and cost sharing. They exist because Medicare's premiums, deductibles, and coinsurance can be a heavy burden for people living on modest fixed incomes. The four programs are the Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individual (QDWI) programs. Each is aimed at a different income band, defined as a percentage of the federal poverty level, and each covers a different slice of Medicare costs. Because the money comes through Medicaid, eligibility and application are handled by the state, even though the benefit is help with Medicare.

The four programs form a ladder. The Qualified Medicare Beneficiary program is the most comprehensive: it serves people with income generally at or below 100 percent of the federal poverty level and pays Medicare Part A premiums (for the minority who owe one) and Part B premiums, along with deductibles, coinsurance, and copayments for Medicare-covered services. A valuable protection comes with QMB status: providers are barred from billing a QMB enrollee for those Medicare cost-sharing amounts. The Specified Low-Income Medicare Beneficiary program covers people whose income is above the state's QMB level but below 120 percent of the poverty level, and it pays the Part B premium. The Qualifying Individual program covers income of at least 120 percent but below 135 percent of the poverty level and also pays the Part B premium, but it is funded from a limited annual allotment and is generally awarded on a first-come basis, and a person cannot receive it while also receiving Medicaid. The Qualified Disabled and Working Individual program is narrower: it helps certain working people with disabilities who have lost premium-free Part A pay the Part A premium, with an income limit reaching up to 200 percent of the poverty level.

Beyond income, each program applies a resource (asset) limit, and both the income and resource limits are adjusted each year, so the exact dollar figures should be checked against the current year's published limits rather than memorized. States also have latitude: some disregard certain income or resources, so a person whose income looks slightly too high on paper can still qualify, which is why applying is worthwhile even in a doubtful case.

Two boundaries matter. First, these programs cover Part A and Part B costs; help with Part D prescription-drug costs is the separate Extra Help program, also called the Part D Low-Income Subsidy. The two connect in one direction worth knowing: enrolling in the QMB, SLMB, or QI program automatically makes a person eligible for Extra Help, so a single application can open the door to both kinds of help. QDWI is the exception, and the Social Security Administration says so directly: Qualified Disabled Working Individuals are not deemed eligible for Extra Help. Second, a Medicare Savings Program is not the same as full Medicaid, though a person can qualify for both; the program pays specific Medicare costs rather than providing Medicaid's broader coverage.

A person applies through their state Medicaid agency, which checks income and resources against the limits for each program and enrolls the applicant in the program they qualify for. Once enrolled, the benefit is largely automatic: a Part B premium that the program covers stops being withheld from the person's Social Security payment, and a QMB enrollee's providers are not supposed to bill them for covered cost sharing.

A hypothetical example of how the ladder sorts applicants, using the poverty level as the yardstick rather than dollar figures. Consider three people. The first has income around 95 percent of the federal poverty level; she falls in the QMB range and gets help with Part A and Part B premiums plus deductibles and coinsurance. The second has income around 115 percent; he is above the QMB cutoff but within the SLMB range, so the program pays his Part B premium only. The third has income around 130 percent; she is within the QI range, which also pays the Part B premium but is funded from a limited pool. All three would also gain Extra Help with their drug costs by virtue of being enrolled in one of those three programs.

Pros

• The programs can eliminate the Part B premium and, at the QMB level, most Medicare cost sharing, which meaningfully raises a low-income beneficiary's usable income.
• QMB, SLMB, or QI enrollment automatically confers Extra Help with Part D drug costs, so one application reaches two forms of assistance.
• State disregards mean some people qualify even when their income looks slightly over the federal limit, so applying is worthwhile.

Cons

• Eligibility depends on both income and resource limits, so savings above the resource cap can disqualify an otherwise low-income person.
• The QI program is funded from a limited allotment and is not guaranteed even to those who qualify.
• The programs help only with Part A and Part B costs; Part D help requires the separate Extra Help program, and full health coverage requires Medicaid.