How Savings Programs Can Help You Pay Medicare Bills

Medicare may be the most affordable insurance option for American seniors, but that does not mean it's cheap. It still may be hard for some people to make ends meet.

A senior who has worked 40 quarters (10 years) in Medicare-taxed employment may get their hospital insurance (Part A) premiums for free but they will pay at least $1,608 for medical insurance (Part B) premiums in 2018. That is the case if they are in the lowest income bracket, earning less than $85,000 as an individual or less than $170,000 as a couple. Those in the highest tax bracket will pay as much as $5,143 per year.

Keep in mind that this does not include the cost of deductibles, copayments, coinsurance, prescription drug (Part D) coverage, or actual care.

Those costs come into perspective when you realize that the maximum amount someone will receive in Social Security benefits in 2018 is $9,047 for an individual and $13,509 for a couple. That means that an individual without other assets or financial resources would pay 18 percent of their annual income towards Part B premiums, and a couple, paying $1,608 in annual premiums per person, would pay as much as 24 percent.

That does not leave much room for other expenses such as food, housing, utilities, and other basic needs.

Thank goodness there are Medicare Savings Programs available to soften the blow. These programs do not pay directly for your health care. What they do is pay down the costs that Medicare leaves on the table, costs like premiums, deductibles, coinsurance, and copayments. Here is a breakdown of what each program covers.

In order to qualify for any of these programs, you need to at least be eligible for, if not enrolled in, Medicare Part A. You must also meet certain income and asset requirements. Simply put, you need to prove that you have a financial need.

QDWI is unique in that it is intended for people who had Medicare based on a disability but who were no longer eligible for premium-free Part A when they went back to work. To be eligible for the program, they must be under 65 years old with a disability, their earnings exceed Substantial Gainful Activity limits, and they are not eligible for Medicaid.

Each of the four Medicare Savings Programs has different financial eligibility requirements. When it comes to income, the federal poverty limit (FPL) is used to determine eligibility in a number of government programs.

Each year the U.S. Census Bureau updates the poverty thresholds across the 48 contiguous states, the District of Columbia, Alaska, and Hawaii. The FPL is then calculated using the poverty threshold and the Consumer Price Index.

These are the current income eligibility limits for 2018.

The income limits are adjusted every year on April 1. These values are valid from April 1, 2018 through March 31, 2019.

Certain assets may be counted when it comes to eligibility for Medicare Savings Programs. Liquid assets, i.e. things that can be sold for cash, may make it harder to qualify. This may include cash, bank accounts, stocks, bonds, real estate, and motor vehicles.

The federal guidelines, however, exclude the following from consideration:

• Your primary residence
• Your primary car
• Burial funds up to $1,500 per person
• Burial plots
• Furniture and other household items
• Life insurance with a cash value of less than $1,500
• Wedding/engagement rings

These are not considered to be countable assets.

Although Medicare is a federal program, the Medicare Savings Programs are run by the Medicaid programs in each state. This allows the states to set the final terms of eligibility.

Most states follow the recommended federal asset limits, but some states — Alabama, Arizona, Connecticut, Delaware, District of Columbia, Mississippi, New York, Oregon, and Vermont — have chosen to set no limit.

If you meet the criteria for any of the four programs listed above, take action. Reach out to your state Medicaid office or call 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048) to apply. You can also download an application online. 

Enrolling in a Medicare Savings Program automatically signs you up for Medicare Part B, if you had not done so already. This can be a convenient way to avoid paying Part B late penalties. Enrolling in Part B after your Initial Enrollment Period or Special Enrollment Period based on employment would land you with lifelong Part B penalties. Signing up for a Medicare Savings Program eliminates any penalties you would have paid on your Part B premiums.

If you are finding it hard to pay off your Medicare bills, know that help is available. You may be eligible for one or more of four Medicare Savings Programs—Qualified Disabled & Working Individuals (QDWI), Qualifying Individual (QI), Qualified Medicare Beneficiary (QMB), or Specified Low-Income Medicare Beneficiary (SLMB). Look into your assets and income to see if you qualify for assistance through your state Medicaid program.