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1 MEDICARE SAVINGS PROGRAMS: A VALUABLE, BUT UNDERUSED, RESOURCE.
Congress created the Medicare Savings Programs (MSP) to provide limited-income Medicare participants with extra financial help to pay for medical costs. The programs are targeted at the Medicare population just above the income levels used in determining Medicaid eligibility.
THE MSP: A BRIEF DESCRIPTION
The (MSP) have three components, Qualified Medicare Beneficiary (QMB), Specified Low-income Medicare Beneficiaries (SLMB) and Qualified Individual 1 (QI1).1 Each program has progressively more generous eligibility criteria. The income levels are tied to the Federal Poverty Level (FPL), plus a $20/month disregard. Health insurance premiums are a significant deduction that reduce the applicant’s gross income.
For a single person, the eligibility levels are:
The MSP have increased in importance as Medicare cost-sharing has increased. For example, the MSP pay the enrollee’s Medicare Part B premium. This premium almost doubled between 2000 ($45.50/month) and 2006 ($88.50/month). Eligible individuals who do not apply for the MSP are losing over $1,000/year.
MEDICARE SAVINGS PROGRAMS: BENEFITS
QMB: offers the greatest MSP benefits, but has the most restrictive eligibility levels.
SLMB: available to individuals with slightly higher incomes, but still applies a resource limit. The direct benefit is payment of the individual’s Medicare Part B premium.
QI1: eligibility extends up to 135% of the federal poverty level ($1,087/month for a one-person household). No resource limit applies to QI1 eligibility. The direct benefit is payment of the individual’s Medicare Part B premium.
Note: The MSP can reimburse the Part B premium for three months prior to date of application.
Enrollment in any MSP automatically qualifies the individual for the full Low Income Subsidy (LIS, or Extra Help) in Medicare’s prescription drug coverage, Part D
MSP AND PART D : THE NEW DEAL
The value of the MSP dramatically increased this year due to the implementation of Medicare’s new prescription drug coverage, Part D. Enrollment in any one of the MSP automatically qualifies the individual for the full Low Income Subsidy (LIS, also referred to as Extra Help).2
The model Medicare Part D plan has a premium, New York’s average is $29.83/month. Also, ▪ a $250 deductible each year, ▪ 25% co-payment responsibility up to the initial coverage limit of $2,250, ▪ a gap in coverage for the next $3,600 of covered Part D drugs (the donut hole). ▪ renewed coverage after $5,100 in incurred drug costs, with the individual paying the greater of a 5% co-payment or co-pays of $2/generic and $5/brand name drugs.
The full LIS reduces or eliminates these costs as it: ▪ provides a credit of $29.83/month toward a Part D premium in New York, ▪ eliminates the deductible, ▪ reduces the individual’s co-pays from 25% to no more than $5/brand name drugs, ▪ continues that coverage past the initial coverage limit (i.e., eliminates the donut hole), ▪ eliminates the individual’s co-payment after $5,100 in incurred drug costs.
Total Drug costs Model Plan pays You pay with LIS you pay
The Social Security Administration rejected about 60% of the applicants who applied directly for the LIS. Most of the denials were based on excess resources. Strangely, many New Yorkers qualify for the MSP (earning the LIS plus the added Medicare-related benefits) even where SSA denied their LIS application. One reason for this is that the MSP use more favorable budgeting rules than SSA could apply to the LIS applications. Most dramatically, one MSP component, the Qualified Individual 1(QI1), has no resource limit in determining eligibility.
MEDICARE SAVINGS PROGRAMS: ELIGIBILITY
The local Department of Social Services will determine MSP eligibility using SSI budgeting methodology.3 Applicants can deduct $20/month in income and out-of-pocket health insurance premiums from gross income to meet the eligibility standards. The home is exempt and other familiar exemptions used in SSI and Medicaid are available.
NYSDOH has a shortened application for SLMB and QI1, available online and attached hereto.
I. Qualified Medicare Beneficiary (QMB)
QMBs are Medicare participants with 1) income no more than 100% of the federal poverty level. The 2006 figures (including the $20/month income disregard) are: a) $837/month ($9,800/year) for a single person household, b) $1,120/month ($13,200/year) for a two-person household. 4 2) resources no more than $4,000.5
New York Medicaid provides full medical coverage for individuals with income up to $692/month, and resources of no more than $4,150. Thus, the QMB program is available to individuals who are up to $125/month over the income level for Medicaid with no client share.
The direct QMB benefit is that Medicare-cost sharing for the individual is covered, including:
▪ Medicare Part B premium, $88.50/month ▪ Medicare Part A hospital deductible, $952/stay and Part B annual deductible, $124. ▪ Part A co-pays, such as the nursing home co-pay of $119/day for covered days 21-100. ▪ Part B co-pays, such as the 20% of reasonable charges.6
II. SPECIFIED LOW-INCOME MEDICARE BENEFICIARIES (SLMB)
SLMBs are Medicare participants with 1) income no more than 120% of the federal poverty level. The 2006 figures (including the $20/month income disregard) are: a) $1,000/month ($12,000/year) for a single person household, b) $1,340/month ($15,840/year) for a two-person household. 7 2) resources no more than $4,000.8
The direct benefit is: ▪ payment of the individual’s Medicare Part B premium ($88.50/month for 2006)
III. QUALIFIED INDIVIDUAL 1 (QI1)
QI1s are Medicare participants with 1) income between 120% and 135% of the federal poverty level. The 2006 figures (including the $20/month income disregard) are: a) $1,123/month ($13,230/year) for a single person household, b) $1,505/month ($17,820/year) for a two-person household. 9
The QI1 component10 is of special interest because it has no resource limit for eligibility. Similar to EPIC, eligibility is determined exclusively by the applicant's income.
The direct benefit is: ▪ payment of the individual’s Medicare Part B premium ($88.50/month for 2006)
A QI1 budgeting example: Ms. Smith is a widow. Her total life savings amount to $12,000. Her gross 2006 Social Security benefit is $1,124.50. Her check is for $1,036 after the 2006 Medicare Part B premium ($88.50) is deducted. She earns $360/year in interest on her savings.
She is enrolled in Medicare and gets her coverage through a Medicare Advantage program, SeniorUnited. Last year SeniorUnited notified Ms. Smith that her monthly premium, $26/month in 2005, would increase to $46/month for 2006. In fact, the medical premium went down to $12. SeniorUnited was presuming she wished to enroll in their $34/month Medicare Part D coverage.
Ms. Smith is taking three prescription drugs. She enrolled in EPIC since prior to 2006 she had no other prescription drug coverage. Her annual EPIC fee is $54. Her EPIC co-pays for the three drugs are $20, $15 and $15 (for drugs that cost $100, $45 and $55). Total monthly copays: $50.
Ms. Smith has “creditable coverage” with EPIC. This means, for most enrollees, EPIC provides at least the level of coverage of the model Part D prescription drug plan. As a result, Ms. Smith could decline to enroll in the SeniorUnited Part plan without facing any premium penalty.
In short, Ms. Smith was facing monthly medical insurance costs of: Medicare Part B: $88.50 SeniorUnited premium: $12 $100.50/month or $1,206/year. Her drug coverage choices and their costs were:
EPIC: $50/month co-pays plus the $54 annual fee. 2006 total - $654 SeniorUnited Part D: $34/month premium, $540 co-pays, $150 in the gap. 2006 total - $1,098.
A knowledgeable advocate helped Ms. Smith apply for the QI1 program in December 2005. She was eligible because her SeniorUnited premium and the $20/month income disregard reduced her income to $.50 less than 135% of the FPL. The 2006 numbers :
Gross income (after $20 disregard) $1,134.50 SeniorUnited premium $ 12.00 Countable income $1,122.50
Ms. Smith did not have to worry about her $12,000 in savings, though that made her ineligible for QMB, SLMB and for the low-income subsidy if she applied for that directly.
Benefits: QI1 pays her 2006 Medicare Part B premium of $88.50/month, and reimburses her for 4 months of her 2005 premium (three months before December).
LIS covers $29.83 of her Part D premium, the $250 deductible and eliminates the gap in coverage above the initial coverage limit of $2,250. Her co-pays are $2/generics, $5 brand names. Ms. Smith could enroll in a lower premium Part D plan, but would have to leave SeniorUnited
EPIC waives the annual fee.
1. 42 U.S.C. § 1396a(a)(10)(E) mandates that each Medicaid State Plan provide: (i) for making medical assistance available for medicare cost-sharing (as defined in §1396d(p)(3) of this title) for qualified medicare beneficiaries described in §1396d(p)(1) of this title; (ii) [omitted]. (iii) for making medical assistance available for medicare cost sharing described in §1396d(p)(3)(A)(ii) of this title subject to §1396d(p)(4) of this title, for individuals who would be qualified medicare beneficiaries described in §1396d(p)(1) of this title but for the fact that their income exceeds the income level established by the State under §1396d(p)(2) of this title but is less than... 120 percent in 1995 and years thereafter of the official poverty line (referred to in such section) for a family of the size involved; and (iv) subject to §§1396u-3 and 1396d(p)(4) of this title, for making medical assistance available (but only for premiums payable with respect to months during the period beginning with January 1998, and ending with September 2007) for medicare cost-sharing described in §1396d(p)(3)(A)(ii) of this title for individuals who would be qualified medicare beneficiaries described in §1396d(p)(1) of this title but for the fact that their income exceeds the income level established by the State under §1396d(p)(2) of this title and is at least 120 percent, but less than 135 percent, of the official poverty line (referred to in such section) for a family of the size involved and who are not otherwise eligible for medical assistance under the State plan;
See, Social Services Law § 367-a(3)(d); 18 N.Y.C.R.R. § 360-7.7, 360-7.8. See also, descriptions at http://hiicap.state.ny.us/facts/medicare_savings.htm. 2. 42 U.S.C. § 1395w-114(a)(3)(B)(v)(II). (The Secretary ...may provide that part D eligible individuals not described in subclause (I) who are determined for purposes of the State plan under subchapter XIX of this chapter to be eligible for medical assistance under clause (i), (iii), or (iv) of section 1396a(a)(10)(E) of this title are treated as being determined to be subsidy eligible individuals described in paragraph (1).).
The Secretary has provided for such treatment of persons eligible for a MSP. 42 CFR § 423.773(c)(iii). 3. 42 U.S.C. §1396d(p)(1), referencing 42 U.S.C. §§1382a (SSI income), 1382b (SSI resources). See also, 42 C.F.R. § 400.200 and CMS State Medicaid Manual, §3490.2 In fact, states can apply income methodologies for the QMBs that are less restrictive than SSI. 42 C.F.R. § 435.601.
New York’s Medicaid Reference Guide (MRG) includes the Medicare Savings Programs with all other Medicaid programs when discussing income. MRG p. 118-120; see also, GIS 05 MA/013. The general rule on income is "In determining eligibility for Medicaid, an A/R's net available income is compared to the appropriate Medicaid level." MRG p. 113. In determining net available income for SSI-related A/Rs, Medicaid uses an income disregard for health insurance premiums, including Medicare Part B's premium. MRG p.192- 194.
Unofficial state policy is that the Medicare B premium should not be deducted from countable income. MRG, page 192, states that "in determining eligibility for SSI-related persons, health insurance premiums are deducted if they are paid by the applicant/recipient". From this, the logic is that since the applicant will not have to pay the premium if enrolled in a MSP, it is not deducted for determining eligibility. 4. GIS 06 MA/006 (2/15/2006). 5. 42 U.S.C. §1396d(p)(1) (twice the SSI level). 6. 42 U.S.C. §1396d(p)(3) states: The term "medicare cost-sharing" means (subject to §1396a(n)(2) of this title) the following costs incurred with respect to a qualified medicare beneficiary, without regard to whether the costs incurred were for items and services for which medical assistance is otherwise available under the plan: (A)(i) premiums under §1395i-2 or 1395i-2a of this title, and (ii) premiums under §1395r of this title, [FN4] (B) Coinsurance under subchapter XVIII of this chapter (including coinsurance described in §1395e of this title). (C) Deductibles established under subchapter XVIII of this chapter (including those described in §1395e and §1395l(b) of this title). (D) The difference between the amount that is paid under §1395l(a) of this title and the amount that would be paid under such section if any reference to "80 percent" therein were deemed a reference to "100 percent".
Such term also may include, at the option of a State, premiums for enrollment of a qualified medicare beneficiary with an eligible organization under §1395mm of this title. 7. GIS 06 MA/006 (2/15/2006). 8. 42 U.S.C. §1396d(p)(1) (twice the SSI level). 9. GIS 06 MA/006 (2/15/2006). 010. The Balanced Budget Act of 1997, PL 105-33, §4732 (Aug. 5, 1997) added this MSP component. Congress recently extended the funding for QI1 through September 2007. Pub. L. 109-91, §101 (Oct. 20, 2005), amending 42 U.S.C. §1396a(a)(10)(E)(iv) and §1396u-3.
1Medicare Savings Programs (MSP) help you cover the cost of Medicare out-of-pocket expenses, such as Part B premiums. You are automatically eligible for Extra Help in paying for the new Medicare Part D drug plan costs if you are in one of these programs.
Eligibility Persons aged 65+, Blind or Disabled who have low income and are enrolled in Medicare Part A and eligible for Medicare Part B.
You can apply at your Local Department of Social Services for the MSPs: * Qualified Medicare Beneficiary (QMB) Program * Specified Low Income Medicare Beneficiary (SLMB) Program * Qualified Individual 1 (QI-1) Program
QUALIFIED MEDICARE BENEFICIARY (QMB) Income Limits 1-person household, up to $817/month (Plus $20/month income disregard) 2-person household, $1,100/month. (Plus $20/month income disregard)
Resource Limits 1-person household, $4,000; 2-person household, $6,000.
You can also have money set aside for burial expenses. Resources include savings and checking accounts, cash on hand, trusts, stocks, etc. The home that you live in is not counted and does not affect your eligibility.
Benefits Pays for Medicare premiums, coinsurance, deductibles and copayments.
SPECIFIED LOW INCOME MEDICARE BENEFICIARY (SLMB)
Income Limits: 1-person household up to $980/month (Plus $20/month disregard) 2-person household, up to $1,320/month ((Plus $20/month income disregard)
Resource Limits 1-person household, $4,000; 2-person household, $6,000.
Benefits Pays the Medicare Part B premium, $88.50 per month. ($1062 per year)
QUALIFIED INDIVIDUAL 1 (QI-1)
Income Limits 1-person household, up to $1,103/month ($13,230/year); 2-person household, up to $1,485/month ($17,820/year). Plus $20 per month disregard, and a deduction for other health insurance premiums.
Resource Limits No resource limits.
Benefits Pays the Medicare Part B premium, $88.50 per month. ($1062 per year)
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