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Revealing the Secret Health Insurance
Medicare Savings Programs have been called the "secret health insurance" for lower-income seniors. In
1999, the Centers for Medicare and Medicaid Services (CMS) estimated that only 54% of people
eligible for the two most popular Savings Programs were actually enrolled in them. The reasons cited
for the low enrollments are:
- relatively few people, including some eligibility workers, understand how Savings Programs work;
- the application process can be tedious; and
- the eligibility rules can be confusing.
In California, the Department of Health Services (DHS) administers the Savings Programs at the
state level. However, people apply for these programs at their local county social service agency -
which in Los Angeles County is the Department of Public Social Services. The local agency then
determines eligibility according to the DHS rules.
The Background
Medicare Savings Programs (also called "buy-in" programs) were created by Congress in 1988 and then
modified three times in the 1990s. Their intent was to provide additional health insurance for
lower-income individuals who do not qualify for full Medicaid or Medi-Cal coverage - usually because
their income or assets are above the Medicaid limits.
A Little Medicare Review
Understanding the Savings Programs requires a basic knowledge of Medicare. Medicare has two
parts: A and B. Part A pays for certain costs relating to hospitalization, skilled nursing, home
health, and hospice care. Most people receive Part A coverage without having to pay - usually because
they (or their spouses) have contributed to Medicare over the years through payroll deductions.
Others, without enough "quarters" of payroll deduction, must pay monthly premiums to obtain Part A
coverage.
Part B of Medicare is for outpatient health care, including physicians' charges.
Part B is voluntary; the monthly premium of $58.70 (in 2003) is usually deducted from a person's
Social Security check. Part B also has an annual deductible of $100, as well as co-payments.
Program Specifics
Following are summaries of the three Medicare Savings
Programs:
1. Qualified Medicare Beneficiary. The QMB program is
potentially the most generous of the programs. It will, in many cases, pay not only the monthly
Part B premiums (more than $700 per year), but also the individual's co-payments and deductibles.
People who must pay premiums to obtain Part A coverage often decline the coverage because they can't afford the premiums - $174 or $316 a month. The QMB program offers a large benefit
for them, because it will pay the Part A premiums.
To get the QMB program to pay the Part A
premiums, individuals who are eligible to purchase it must first enroll in Part A at the local Social
Security office. They should note on the enrollment form that they want Part A only if the premiums
will be paid by the QMB program. Then, they apply for QMB.
2. Specified Low-Income
Medicare Beneficiary. The most under-utilized of the three programs, SLMB pays for the
Part B premiums. For those who qualify, SLMB saves more than $700 a year.
3.
Qualified Individual Q-1. The QI-1 program also pays the monthly Part B premiums and
has the highest countable income limits of the three programs. States are given annual block grants
for the QI-1 program, and if that money is used up in a given year, then an eligible person would not
receive this benefit. To date, California has never used up its annual funding for the QI-1 program.
Qualifying Levels for Savings Programs
Shown below are countable asset and monthly income limits for 2003 for the three Savings Programs:
Asset Limits
As shown above, the asset (or resource) limits are low and uniform for all
three programs. Almost all of a person's or couple's assets count against the limit. But, there are
important exclusions, including the value of a person's home, personal possessions including a car,
some life insurance policies, and more.
Income Limits
The income
limits vary among the three programs. And, the calculations exclude certain types of income. People
who initially believe their income levels are too high may find that, after the exclusions are made,
they are within the eligibility limits.
In the calculations, if an individual has monthly
earned income, the first $65 of this amount is not counted, nor is 50% of
the remaining earned income balance. Earned income typically comes from a current job. Social Security
and pension payments, and earnings from investments, are considered unearned
income.
Here's an example: Elva has monthly gross income of $1,000 - of which $725 is from
her Social Security payments. The remaining $275 is earned income that comes from a part-time job.
From this $275, Medi-Cal first subtracts $65 and then counts only one-half of the remaining earnings.
So, Elva's countable income is $830 ($725 plus $105), not the $1,000 gross
amount.
This is a simplified example. Other, lesser known, exclusions can also reduce countable
income. An added point: for people who purchase Part B coverage through monthly deductions from their
Social Security checks, those deductions will be added back when determining countable Social
Security income.
The Application Process
If your income and asset levels
are close to the qualifying limits, you should apply. DHS or the local social service office may find
exclusions that you are unaware of that will lower your countable assets or income.
Ideally, you will submit a single application to your local
social services office - and the office will determine which of the Medi-Cal programs, including the
three Medicare Savings Programs, you might be eligible for. In reality, though, you may have to
complete more than one set of application forms.
As part of the application process, the
local office or DHS will verify your income and assets, and you will be asked to provide financial
statements and account information. By law, they must respond to your application within 45 days.
Finally, if you are declared eligible, each year the local office or DHS will re-determine whether
you meet the requirements.
If you decide to apply, we recommend that you turn in your
application in person.
Where to Find More Information
For eligibility
questions, there are three primary resources; all of them are free:
- Call the Medi-Cal eligibility line at (916) 552-9430.
- Call your local Health Insurance Counseling and Advocacy Program. You can find them through the web at
www.cahealthadvocates.org or
your local phone book. The Los Angeles County HICAP can be reached at (800) 824-0780.
- Go to a local county social service office and speak with an eligibility worker.
CMS has a four-page brochure describing the Medicare Savings Programs in general. Find the brochure
at:
www.medicare.gov/Publications/Search/View/ViewPubList.asp?Language=English
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