The Medicare Savings Program Expansion Provision in H.R. 3 Could Provide a Cost Cap for More than 3.5 Million Beneficiaries

The Medicare Savings Program Expansion Provision in H.R. 3 Could Provide a Cost Cap for More than 3.5 Million Beneficiaries

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Takeaway

More than 3.5 million Medicare beneficiaries could have their premiums and out-of-pocket costs capped under legislation from Reps. Andy Kim (D-NJ), Dwight Evans (D-PA), and Lisa Blunt Rochester (D-DE) being considered as part of H.R. 3.1 This provision would help beneficiaries pay for out-of-pocket costs like a hospital or doctor visit.

Medicare is supposed to be a safety net, but beneficiaries in the program don’t have a critical protection: a limit on their out-of-pocket costs. It doesn’t have to be this way. After all, Americans under age 65 with coverage through the Affordable Care Act (ACA) exchanges have a cap on their premiums based on their income and an out-of-pocket limit that protects them from high costs. Deductibles and copayments are also a big problem for seniors and people with disabilities who have Medicare coverage. Average out-of-pocket costs for Medicare beneficiaries were more than $2,100 in 2016. If you add that cost to a beneficiary’s monthly premium, the individual is paying close to $4,500 a year on health care costs.2

 A federal program, the Medicare Savings Program (MSP), is supposed to provide financial assistance for premiums and out-of-pocket health costs for low-income Medicare beneficiaries. But it has gaps. For example, the program doesn’t provide any assistance with out-of-pocket costs to Medicare beneficiaries who have annual incomes greater than 100% of the federal poverty level (FPL), or $12,140.3

Representatives Kim, Evans, and Blunt Rochester introduced legislation that would address this gap and cap costs for low-income Medicare beneficiaries.4 Portions of this legislation have been included in the Lower Drug Costs Now Act of 2019 (H.R. 3) as amended for a vote on the House floor. The new provision could cap both out-of-pocket costs and premiums for 3.5 million Medicare beneficiaries who have incomes of less than 150% of FPL, or $18,210, that pass an asset test.

This would help two groups of beneficiaries. The first group are low-income seniors currently enrolled in the MSP program with incomes between 100% and 135% of FPL, or between $12,140 and $16,389. Previously, these beneficiaries were only getting assistance with their Medicare Part B premiums. Under this new provision, at least 1.8 million and up to 2.8 million beneficiaries could now get assistance with premiums and out-of-pocket costs.5 The second group are the 740,000 seniors who weren’t previously eligible. The new provision raises the income eligibility from 135% FPL to 150% FPL. This is a huge financial relief for low-income seniors who no longer need to worry about co-insurance for a hospital stay or a deductible for a doctor’s visit. According to our analysis, it could cap costs for more than 3.5 million beneficiaries.6

Number of beneficiaries that could benefit from the Kim-Evans-Blunt Rochester provision in HR 3:

Previously MSP eligible beneficiaries who could have out-of-pocket caps in addition to premium assistance

2,790,500

Newly eligible beneficiaries

739,600

Total number of beneficiaries assisted by the Kim-Evans-Blunt Rochester provision of HR 3

3,530,000

Bottom line: The Kim-Evans-Blunt Rochester provision of HR 3 that expands the Medicare Savings Program could provide needed financial protection to more than 3.5 million low-income Medicare beneficiaries.

Endnotes

  1. United States, Congress, House. Helping Seniors Afford Health Care Act. Congress.gov, https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/HR4671ih_10.15.2019.pdf. 116th Congress, 2nd session. 

  2. Cubanski, Juliette, Koma, Wyatt, Damico, Anthony, and Tricia Neuman. “How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care?” Kaiser Family Foundation, 2019. https://www.kff.org/medicare/issue-brief/how-much-do-medicare-beneficiaries-spend-out-of-pocket-on-health-care/. Accessed Nov. 13, 2019.

  3. “Eligibility for Medicare Savings Programs for Qualified Individuals (QIs).” Kaiser Family Foundation, 2018.  https://www.kff.org/other/state-indicator/eligibility-for-medicare-savings-programs-for-qualified-individuals-qis/. Accessed Oct. 30, 2019.; “ Yearly Guidelines and Thresholds.” Health Reform: Beyond the Basics, 2019. http://www.healthreformbeyondthebasics.org/wp-content/uploads/2017/11/REFERENCEGUIDE_Yearly-Guidelines-and-Thresholds_2019.pdf. Accessed December 9, 2019.

  4. United States, Congress, House. Helping Seniors Afford Health Care Act. Congress.gov, https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/HR4671ih_10.15.2019.pdf. 116th Congress, 2nd session. 

  5. Centers for Medicare and Medicaid Services, “MM Enrollee State and County Enrollment Snapshots Quarterly,” December 2017. https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/DataStatisticalResources/Downloads/MMEnrolleeStateandCountyEnrollmentSnapshotsQuarterly122018Data.xlsx  

  6. “Health Insurance Coverage Status and Type By Ratio of Income to Poverty Level in the Past 12 Months By Age.” United States Census Bureau, American Community Survey, 2017. https://data.census.gov/cedsci/table?q=B27016&table=B27016&tid=ACSDT1Y2018.B27016&lastDisplayedRow=29. Accessed Oct. 30, 2019.; “Eligibility for Medicare Savings Programs for Qualified Individuals (QIs).” Kaiser Family Foundation, 2018. https://www.kff.org/other/state-indicator/eligibility-for-medicare-savings-programs-for-qualified-individuals-qis/. Accessed Oct. 30, 2019.; Moon, Marilyn, Friedland, Robert, and Lee Shirey. “Medicare Beneficiaries and Their Assets: Implications for Low-Income Programs.” The Urban Institute, Center on Aging Society, and Kaiser Family Foundation, June 2002, Exhibit 3. https://www.urban.org/sites/default/files/publication/59826/1000249-Medicare-Beneficiaries-and-Their-Assets.PDF. Accessed Nov. 6, 2019.; “State-Level Dual Status Codes, December 2017.” Centers for Medicare and Medicaid Services, Dec. 2017. https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/DataStatisticalResources/Downloads/MMEnrolleeStateandCountyEnrollmentSnapshotsQuarterly122018Data.xlsx. Accessed Oct. 30, 2019.