Medicare and Medicaid Guide for Low-Income Recipients

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Contributing expert: Kelly Blackwell, Certified Senior Advisor®

Medicare is a federal insurance program that provides health coverage to eligible enrollees. Although the program’s funding comes from taxes, beneficiaries must pay monthly premiums, annual deductibles, and coinsurance for many of the services they receive. Some enrollees even have to pay a premium for Medicare Part A, increasing the total cost of coverage. For Medicare beneficiaries with low incomes, it can be difficult to absorb these out-of-pocket costs. In some cases, if you have limited income and resources, you can get help from Medicaid to pay premiums and other Medicare expenses.

Updated: July 30, 2021


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Kelly Blackwell
Certified Senior Advisor (CSA)
Kelly Blackwell
Certified Senior Advisor (CSA)

Kelly Blackwell is a Certified Senior Advisor (CSA)®. She has been a healthcare professional for over 30 years, with experience working as a bedside nurse and as a Clinical Manager. She has a passion for educating, assisting and advising seniors throughout the healthcare process.

How Medicaid Works with Medicare

Many of the millions of Medicare enrollees in the United States are at least 65 years old; however, Medicare is also available to younger people with qualifying disabilities. You may also be eligible for Medicaid if you meet income and resource limit requirements.

How claims work

Medicaid always pays last. In other words, it doesn’t pay anything toward your medical expenses until Medicare, a group insurance plan, and a Medicare Supplement Insurance Plan (Medigap) have paid their portions of the bill. For this reason, Medicaid is known as the “payer of last resort.”

Any time you receive a Medicare-approved service, the provider files a claim with Medicare. Once Medicare pays its share, the provider can file a claim with secondary insurance providers, such as an employer-sponsored insurance plan or Medigap plan. Finally, once all those insurers have paid their share of the bill, Medicaid pays its share. This applies to various services, including hospital care, laboratory tests, X-rays, and doctor visits. If you’re injured in an accident, Medicaid may require a liability insurer or a workers’ compensation plan to cover some of the costs before paying out on a claim.

How much do you have to pay?

For beneficiaries with dual eligibility, most health care costs are covered by Medicare and Medicaid, including the monthly premiums for Original Medicare and Medicare Advantage Plans. Original Medicare provides basic inpatient and outpatient medical care, but it doesn’t cover prescriptions.

As an alternative to Original Medicare, Medicare Advantage Plans often cover extra services, such as dental cleanings and eye exams for glasses. Most Medicare Advantage Plans also include prescription coverage. Dual-eligible beneficiaries will automatically qualify for Extra Help paying for Medicare drug coverage (Part D). Medicare Part D is a supplemental prescription drug plan often purchased with Original Medicare to ensure coverage of medication costs.

If you need a medication that Medicare doesn’t cover, Medicaid may cover some of the costs. Total out-of-pocket costs for a dual-eligible individual depends on several factors, including the type of plan selected (Original Medicare or Medicare Advantage) and whether you need a Part D supplement.

Can you get help with payments?

Medicare beneficiaries with income and financial resources below a certain threshold may get help from Medicaid to pay Medicare premiums and other out-of-pocket costs. Several forms of assistance are available, including the Qualified Medicare Beneficiary program, the Specified Low-Income Beneficiary program, state Medicare Savings Programs, and the Qualifying Individual program.

Medicaid may also make Medicare coverage more affordable by paying for certain services that Medicare doesn’t cover. For example, Medicare doesn’t typically cover eyeglasses or hearing aids. Still, Medicaid may cover some or all of the cost of these items. Medicaid may also cover more than 100 days of care in a skilled nursing facility. In comparison, Medicare only pays for a maximum of 100 days of this type of care per benefit period. Eligibility for these programs depends on your income, assets, and eligibility for other savings programs run by government agencies and nonprofit organizations.

2021 Dual Eligible Standards

Medicare is available if you’re at least 65 years old or have some disability, such as amyotrophic lateral sclerosis, that qualifies you for Social Security Disability Income (SSDI) benefits. To receive premium-free Part A coverage, you must have worked and paid Medicare taxes for a minimum number of quarters. You must also be a U.S. citizen or lawful permanent resident.

Medicaid is also available to U.S. citizens and lawful permanent residents. However, there are some income and financial resource limits in addition to the other eligibility requirements. Financial eligibility is determined based on your modified adjusted gross income (MAGI). Some applicants are exempt from the MAGI requirements, such as individuals who are blind or disabled. To be dual-eligible, you must meet the basic Medicare requirements and the income and resource requirements for Medicaid.

Eligibility for Age Disability Income Assets
Medicare 65+ or younger with a qualifying disability
  • Amyotrophic lateral sclerosis (ALS)
  • End-stage renal disease
  • Any disability that qualifies the enrollee for 24+ months’ worth of SSDI payments
N/A N/A
Medicaid 18+
  • Cerebral palsy
  • Traumatic brain injury
  • Paraplegia
  • Down syndrome
  • Schizophrenia
  • Autism
  • Other disabling illnesses or injuries
$350 to $2,402 depending on the state of residence and type of Medicaid coverage (e.g., regular Medicaid, nursing home Medicaid, Medicaid for aged, blind, and disabled, etc.) $1,500 to $10,000 (single)

$1,500 to $15,000 (married) if both spouses are applying for coverage

$1,500 to $130,800 for the non-applicant spouse if only one spouse is applying
* No asset limit in Arizona
Medicare and Medicaid 65+ or younger with a qualifying disability or medical condition
  • Amyotrophic lateral sclerosis (ALS)
  • End-stage renal disease
  • Cerebral palsy
  • Traumatic brain injury
  • Paraplegia
  • Down syndrome
  • Schizophrenia
  • Autism
  • Other disabling illnesses or injuries
$1,094/$1,472 $7,979/$11,960*

 
* Except in Alaska and Hawaii

Qualified Medicare Beneficiary (QMB)

The Qualified Medicare Beneficiary program offers the most assistance with Medicare out-of-pocket costs. You may receive help paying your Part A and/or Part B premiums, copayments, coinsurance, and deductibles. For example, under the QMB Only Without Other Medicaid program, Medicaid pays Part A and part B premiums and copays, coinsurance, and deductibles for Medicare-approved services. The monthly income limit is 100% of the federal poverty level (FPL) plus $20.

QMB Plus offers an additional level of coverage by giving eligible beneficiaries full Medicaid coverage in addition to assistance with their Medicare premiums, deductibles, copays, and coinsurance. QMB Plus requires you to qualify for both full Medicaid and QMB. You must also have no more than three times the SSI resource limit.

2021 Dual Eligible Standards for QMB in all states and D.C. except Alaska and Hawaii:

Individual Couple
Income limit $1,094 $1,472.00
Asset limit $7,979.00 $11,960.00

 
In Alaska: $1,361/$1,835, in Hawaii: $1,255/$1,690

Specified Low-Income Medicare Beneficiary (SLMB)

The Specified Low-Income Medicare Beneficiary program also has two options, SLMB Without Other Medicaid and SLMB Plus. The SLMB program covers fewer Medicare expenses than the QMB program because it has higher income limits. SLMB Without Other Medicaid is available to applicants with incomes between 100% and 120% of the FPL. You must also be enrolled in Medicare Part A and have no more than three times the SSI limit in financial resources. In addition, the SLMB Without Other Medicaid program pays your Medicare Part B premiums.

The SLMB Plus program covers Part B premiums and offers full Medicaid coverage to enrollees. To qualify for SLMB Plus, you must meet the complete Medicaid requirements in addition to meeting the income and resource requirements for the SLMB Without Other Medicaid program.

2021 Dual Eligible Standards for SLMB in all states and D.C. except Alaska and Hawaii:

Individual Couple
Income limit $1,308 $1,762.00
Asset limit $7,970.00 $11,960.00

 
In Alaska: $1,629/$2,197, in Hawaii: $1,502/$2,024

Qualifying Individual (QI)

Under the Qualifying Individual program, Medicaid pays your Medicare Part B premiums. The QI program is different from the QMB and SLMB programs because it’s only available on a first-come, first-served basis. Another difference is you must apply for QI coverage every year; however, enrollees who received QI benefits the previous year are given priority.  You can’t get QI benefits if you qualify for Medicaid.

The QI income limit is slightly higher than the limit for the SLMB program: 120% to 135% of the FPL. QI beneficiaries are also capped at no more than three times the SSI resource limit. Unlike many other Medicare Savings Plans, the QI program is administered by individual states, not the federal government. If you’re interested in the QI program, contact your state Medicaid program for information on applying.

2021 Dual Eligible Standards for QI in all states and D.C. except Alaska and Hawaii:

Individual Couple
Income limit $1,469 $1,980.00
Asset limit $7,970.00 $11,960.00

 
In Alaska: $1,831/$2,470, in Hawaii: $1,688/$2,275

Qualified Disabled and Working Individuals (QDWI)

The Qualified Disabled and Working Individuals Program helps pay Medicare Part A premiums for eligible individuals. To qualify for the QDWI program, you must be under 65, have a disability, and meet the income and resource requirements. You can’t be on state medical assistance and must have lost your premium-free Part A coverage and SSDI benefits because you decided to return to work.

At up to 200% of the FPL, the income limit for the QDWI program is much higher than the QMB, SLMB, and QI programs. You may also have up to two times the SSI limit in financial resources. In addition, enrollees who qualify for QDWI aren’t eligible for other Medicaid benefits.

2021 Dual Eligible Standards for QDWI in all states and D.C. except Alaska and Hawaii:

Individual Couple
Income limit $4,379 $5,892.00
Asset limit $4,000.00 $6,000.00

 
In Alaska: $5,449/$7,342, in Hawaii: $5,025/$6,765

Qualifying and Applying for Medicare and Medicaid

The Medicare eligibility requirements can be confusing, especially for applicants under 65 who get Medicare coverage for a qualifying disability. Area Agencies on Aging have trained counselors on hand to answer questions about Medicare and help current Medicare beneficiaries determine if they might be dually eligible. AAA counselors can also help you determine if you’re eligible for the QMB, SLMB, QI, or QDWI programs.

Some communities have geriatric care managers available to assist. A geriatric care manager is a registered nurse or social worker who has been trained to help older adults access health and social services. In addition, elder care attorneys, State Health Insurance Assistance Program counselors, and commission-based Medicaid planners are also good resources for information on Medicaid eligibility and benefits.

When income exceeds the limit

Some states offer spend-down programs to help individuals whose incomes exceed the Medicaid limits. This type of program allows you to deduct certain medical expenses from your income, making it possible to qualify for certain types of Medicaid. For example, some states require you to submit receipts documenting your medical expenses. Others allow you to pay a monthly premium representing the difference between your income and the Medicaid income limit. Other spend-down requirements are up to each state.

When assets exceed the limit

When assets exceed the limit, it may be possible to “spend down” those assets until the individual becomes eligible for Medicaid coverage. However, use caution when using this approach. Almost every state has a five-year lookback period in which officials can examine a Medicaid applicant’s asset transfers. If you violate the rules, the state can impose a period of Medicaid ineligibility. Nevertheless, some transactions are permitted, such as modifying a home to make it more accessible or purchasing medical items that aren’t covered by insurance.

Medicaid Costs

As long as they cover mandatory benefits required by CMS, states can implement cost-sharing arrangements as part of their Medicaid plans. CMS caps out-of-pocket costs, but state Medicaid programs are also allowed to charge a premium for enrollees in the following groups:

  • Pregnant women with household incomes at or above 150% of the (Federal Poverty Level (FPL)
  • Infants with household incomes at or above 150% of the FPL
  • Medically needy individuals
  • Disabled individuals who are eligible for Medicaid due to the Family Opportunity Act
  • Qualified disabled individuals who work and have incomes above 150% of the FPL
  • Disabled individuals who are employed under the Ticket to Work and Work Incentives Improvement Act of 1999

States also have the right to classify prescription medications as preferred or nonpreferred and charge different copays for each type. For people whose incomes are below 150% of the FPL, copays for nonpreferred drugs are limited to small amounts. If a Medicaid beneficiary has an income exceeding 150% of the FPL, the nonpreferred copay may be as much as 20% of the cost of the drug. States are also allowed to charge different copay amounts for generic and brand-name drugs.

Although emergency care is typically exempt from all out-of-pocket charges, a state’s Medicaid program can decide to charge a copay for non-emergency use of the emergency department. The copayment can only be charged if a health professional determines that you don’t need emergency care. An alternative care provider must also be available to care for you promptly.

Medicaid Benefits

The federal government and individual states work together to ensure that individuals with low incomes have access to basic health coverage under the Medicaid program. Because the federal government distributes funds to the states, the Centers for Medicare & Medicaid Services, a federal agency, has standards that every state Medicaid program must meet. It’s up to individual states to decide if they want to offer additional services.

CMS’s Mandatory benefits include hospital care, laboratory tests, radiology services, home health services, and care provided by a primary care physician or other medical specialists. CMS also requires each state to cover a certified family nurse practitioner, a nurse-midwife, or a certified pediatric nurse practitioner. In addition, states that decide to offer more than the minimum level of coverage may pay for physical therapy, prescription drugs, occupational therapy, and case management.

Medicaid also covers some services that aren’t covered by Medicare, which benefits persons with dual eligibility. For example, Medicaid may cover medical transportation, personal care assistance, chore services, housekeeping, medication administration services, meal delivery, and in-home nursing care. However, not all optional services are available in all states, so it’s important to check with Medicaid before signing up with a new health care provider or hiring someone to perform in-home care. Some states cover only mandatory benefits while other states pay for extras like prosthetics, dentures, chiropractic care, podiatry, and private duty nursing.

How to Apply

Contact your local Medicaid office to ask questions about program requirements and request a paper application. In many states, it’s also possible to apply for Medicaid coverage on HealthCare.gov. If you aren’t eligible for Medicaid, it may be possible to get a tax credit to help pay for a plan from the Health Insurance Marketplace. HealthCare.gov asks for the names, birth dates, and Social Security numbers of all household members, so it’s important to have this information on hand before beginning the application process. You should also have your pay stubs or W-2s on hand to help with questions related to household income.

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