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

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

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.