While Medicare helps cover your hospitalization and medical costs, it is not free as you are still required to pay premiums, deductibles, and copayments. Thankfully, for those with limited income and savings, there are programs available, such as the Medicare Savings Program (MSP), that can reduce healthcare costs.
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What is the Medicare Savings Program (MSP)?
The Medicare Savings Program (MSP) is a Medicaid-administered program where your state will help in paying for your Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) premiums if you are under Original Medicare. In some cases, the state also covers your Part B out-of-pocket expenses (such as deductibles, coinsurance, copayments) if you meet specific requirements.
It’s important to note that Medicaid is a separate program from Medicare. Both programs provide health insurance, but Medicare coverage is primarily for seniors, while Medicaid eligibility depends on your income. It’s possible to take part in both programs at the same time. The states partially fund Medicaid, and each state can set its eligibility requirements.
While MSPs are Medicaid-administered, you do not need to have Medicaid to apply for MSPs. Some MSPs do not require you to be under Medicaid.
Being under an MSP program also automatically qualifies you for Extra Help (also called ‘Low Income Subsidy’), the federal program that pays prescription drug costs for low-income Medicare beneficiaries.
There is a total of four (4) kinds of MSPs. Benefit levels vary depending on your level of income and assets:
- Qualified Medicare Beneficiary (QMB) Program
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualifying Individual (QI) Program
- Qualified Disabled and Working Individuals (QDWI) Program
We will discuss details about these programs.
Who qualifies for Medicare Savings Programs?
The Qualified Medicare Beneficiary (QMB) program provides the most benefits. It helps in paying for Medicare Part A premiums, as well as your Medicare Part B premiums and out-of-pocket costs (deductibles, coinsurance, copayments).
The QMB program requires your income to be 100% of the Federal Poverty Line (FPL) or lower. Specifically, your income and resource (or asset) are below the following limits:
| Your situation: | Monthly income limit:* | Resource limit: |
|---|---|---|
| Individual | $1,153 | $8,400 |
| Married couple | $1,546 | $12,600 |
* Limits slightly higher in Alaska and Hawaii
Specified Low-Income Medicare Beneficiary (SLMB) Program
If you earn a little more than the QMB income requirement, you may qualify for the Specified Low-Income Medicare Beneficiary (SLMB) program.
The SLMB program helps in paying for your Medicare Part B premiums. Unlike QMB, the SLMB program does not pay for Medicare Part A premiums and Medicare Part B out-of-pocket expenses.
The main criteria to qualify for the SLMB program is that your income must be at 120% of the Federal Poverty Line (FPL) or lower. Specifically, your income and resource (or asset) are below the following limits:
| Your situation: | Monthly income limit:* | Resource limit: |
|---|---|---|
| Individual | $1,379 | $8,400 |
| Married couple | $1,851 | $12,600 |
* Limits slightly higher in Alaska and Hawaii
Qualifying Income (QI) Program
If you are not eligible under QMB or SLMB, you might qualify for the third MSP program – Qualifying Income Program (QI). This program is for those who have Medicare Part A but have limited income and resources.
Similar to the SLMB program, the QI program only helps pay your Medicare Part B premiums. However, if you qualify or receive Medicaid benefits, you cannot get QI benefits.
Your income must be at 135% of the Federal Poverty Line (FPL) or lower to qualify for the QI program. Specifically, your income and resource (or asset) are below the following limits:
| Your situation: | Monthly income limit:* | Resource limit: |
|---|---|---|
| Individual | $1,549 | $8,400 |
| Married couple | $2,080 | $12,600 |
* Limits slightly higher in Alaska and Hawaii
The QI program has limited funding. Therefore, the granting of this benefit is on a first-come, first-serve basis. However, they will prioritize your application if you qualified the previous year.
Qualified Disabled and Working Individuals (QDWI) Program
The Qualified Disabled and Working Individuals Program (QDWI) program is not for Medicare beneficiaries over 65. Instead, the QDWI program helps disabled workers under 65 eligible for Medicare who cannot pay their Medicare Part A premiums after returning to work.
Medicare-eligibles who apply for the QDWI program have a disabling impairment, continue to work, and are not otherwise eligible for Medicaid.
The QDWI program pays for Medicare Part A premiums only.
To qualify for the QDWI program, an applicant should not be receiving medical assistance from your state. Plus, your income must be 200% of the Federal Poverty Line (FPL) or lower. Specifically, your income and resource (or asset) are below the following limits:
their income and asset should fall below these limits:
| Your situation: | Monthly income limit:* | Resource limit: |
|---|---|---|
| Individual | $4,615 | $4,000 |
| Married couple | $6,189 | $6,000 |
* Limits slightly higher in Alaska and Hawaii
What is the Medicare Savings Program’s Application Process?
First, call your state’s Medicaid office and fill up an application for a medicare discount card. Aside from your IDs, you may need to submit the following documents:
- Proof of address – utility bills
- Proof of income – Social Security Administration (SSA) award letter and income tax return
- Proof of resources – bank statements, stock certificates, life insurance policies
The state will send you a Notice of Action after 45 days. If you are eligible for QMB Medicare, your benefits will start the following month. On the other hand, if you are suitable for SLMB or QI, the state will begin paying your Medicare Part B premiums on the date stated in your Notice of Action.
What is Medicare Savings Program’s Income Definition?
In all states, the following are not counted as income:
- First $20 of your monthly income
- First $65 of your monthly wages
- Half of your monthly wages (after deducting $65)
- Food stamps under the Supplemental Nutrition Assistance Program (SNAP)
Please take note that each state follows its guidelines. For example, some states have higher income limits for MSP. Moreover, some states exclude more items before computing the qualifying income. Also, remember that the income limits change since the amounts depend on the annual federal poverty level (FPL) amount.
What Is Included In The Medicare Savings Program’s Assets Definition?
When determining your eligibility for MSP, the following resources (or assets) are counted:
- Bank accounts (checking, savings)
- Retirement accounts (IRA)
- Investments (stocks, bonds)
- Mutual funds
- Real estate, excluding your primary residence
The following assets, however, are excluded:
- Your primary residence
- One car
- Burial plot
- $1,500 in burial expenses kept aside
- Life insurance policies
- Advance tax credits
- Money received for housing assistance
- Furniture
- Household and personal items
The eligibility rules vary from state to state. Some do not even apply resource limits. However, just like income limits, the resource limits change yearly, so it’s essential to stay up to date on whether you still qualify.
Medicare Savings Program: Prescription Drug Coverage
While MSPs will help pay for Part A and/or Part B premiums, it does not pay for any costs related to prescription drugs.
However, the good news is that if you are over 65 and qualify for any of the three MSP programs available to you – QMB, SLMB, or QI – you automatically qualify for Extra Help, also known as the Low-Income Subsidy (LIS) program. Medicare Extra Help is a federal program that pays for your Medicare Part D (Prescription Drug) premiums, deductibles, and copayments.
Final Words on Medicare Savings Program
If you have limited income and resources, a Medicare Savings Program (MSP) can help pay for your Medicare premiums. There are four (4) different MSPs available depending on whether you are over or under 65 and your income limits. If you are over 65 and enrolled in an MSP, you will also automatically be eligible for Medicare Extra Help to pay for your prescription drug plan. To apply for an MSP, you must reach out to your State Medicaid Program.
At CoverRight, we’re here to help you find the right coverage that you deserve. Reach out today and start finding the best Medicare plan for you.
