While Medicare covers most health care costs for more than 65 million Americans, it does not cover all of them and the remaining bills can add up quickly. For Medicare beneficiaries who qualify based on having low-income and limited assets, the Medicare Savings Programs (MSP) will cover some of those costs.
Medicare beneficiaries need to pay out of pocket for their premiums and they need to pay their deductibles, coinsurance, and copayments when buying prescription drugs, seeing a doctor or other health care providers, and if they need inpatient or outpatient hospital care, says Kata M. Kertesz, a senior policy attorney for the Center for Medicare Advocacy, a national, nonprofit law organization in Willimantic, Conn., and Washington, D.C.
“In traditional Medicare, there is no maximum amount beneficiaries can incur in out-of-pocket costs each year for Medicare Part A (hospital insurance) and for Medicare Part B (for physician and outpatient care),” Kertesz explains. “Therefore, these out-of-pocket costs can be substantial, which is especially concerning given the limited incomes and assets of most Medicare beneficiaries.”
About half of all Medicare members are enrolled in Medicare Advantage (MA) plans in which private health insurers require beneficiaries to pay varying amounts out-of-pocket depending on the plan you choose. Medicare Advantage members should check with their insurers about cost-sharing and the plan’s out of pocket cap, which can change every year, Kertesz advises.
For Medicare beneficiaries unable to afford these costs, there are four Medicare Savings Programs that help members pay for their premiums, deductibles, copayments, and coinsurance. When you qualify for all but one of the MSPs, you also qualify for the Medicare Part D Low-Income Subsidy program which helps pay for prescription medications, she says.
Enrolling in an MSP could save you $1,978.80 annually, according to the National Council on Aging.
Only about half of eligible Medicare beneficiaries were enrolled in MSPs, according to a federal study in 2017. For anyone on a low or fixed income, therefore, it’s important to apply, Kertesz says.
What are the Medicare Savings Programs?
The four programs are the:
- Qualified Medicare Beneficiary (QMB), which helps pay for the premiums for Part A and Part B and for deductibles, coinsurance, and copayments
- Specified Low-Income Medicare Beneficiary (SLMB), which helps pay for Part B premiums
- Qualifying Individual (QI), which helps pay for Part B premiums
- Qualified Disabled Working Individual (QDWI), which helps pay for Part A premiums
Once enrolled in one of the first three programs (QMB, SLMB or QI), you become eligible to receive the Medicare Part D Low-Income Subsidy (LIS), which is also known as Extra Help
Who qualifies for Medicare Savings Programs?
Federal law sets minimum eligibility requirements, but individual states may have more generous criteria for each MSP. “Some states have more generous income requirements than others and some states do not have asset tests for eligibility,” Kertesz notes.
To qualify for an MSP, Medicare beneficiaries need to be enrolled in Medicare Part A and meet the monthly income and asset limits in your state. Assets can include real estate, mutual funds, stocks and bonds, retirement accounts, and savings and checking accounts, but not all assets and income are counted.
What is the income limit to qualify for a Medicare Savings Plan?
The income and asset limits are based on the Federal Poverty Level (FPL) and change annually.
QMB
- Monthly income limit: $1,215 for individuals; $1,663 for married couples
- Asset limit: $9,090 for individuals, $13,630 for married couples
SLMB
- Monthly income limit: $1,478 for individuals; $1,992 for married couples
- Asset limit: $9,090 for individuals, $13,630 for married couples
QI
- Monthly income limit: $1,660 for individuals; $2,239 for married couples
- Asset limit: $9,090 for individuals, $13,630 for married couples
QDWI
- Monthly income limit: $4,945 for individuals; $6,659 for married couples
- Asset limit: $4,000 for individuals; $6,000 for married couples
The LIS program has higher income and asset limits and can cover most or all of your Part D premiums and most of your OOP costs, Kertesz says. National Council on Aging lists the federal monthly income amount for an individual at $1,823 and for a couple at $2,465. Individuals are eligible to enroll in the LIS if their assets total $16,660 or less and if a married couple’s assets total $33,240 or less. Note that the asset limits include a burial allowance of $1,500 per person, Kertesz notes.
How to apply for Medicare Savings Plans
You apply through the Medicaid program in your state, as listed on this page at Medicaid.gov. To get unbiased, one-on-one help with the application, contact your State Health Insurance Assistance Program (SHIP).
