Medicare savings programs (MSPs) are federally funded programs that are administered at the state level to help lower-income individuals pay for Medicare costs. There are four programs that offer benefits to Medicare recipients but not everyone is eligible. You’ll need to be within specific guidelines for income and financial resources to qualify for help.
Need a hand understanding different Medicare options? A financial advisor can help you find your way.
Understanding Medicare Savings Programs
Medicare is a federal program that provides health care to individuals aged 65 and older, and certain people with disabilities who are under 65. Those who are eligible can enroll in Medicare Part A for hospital insurance and Medicare Part B for medical insurance. Like other types of insurance, Medicare has premiums, deductibles, coinsurance and copayments.
Medicare savings programs are designed to help with those costs. Specifically, these programs are extended to Medicare recipients who have low or limited income and financial resources they can rely on to cover healthcare expenses. These programs can be especially beneficial for seniors and disabled individuals who could be struggling to afford necessary medical care.
Medicare Savings Programs vs. Medicare Extra Help
Extra Help is another Medicare program that’s designed to help lower-income individuals afford their prescription drug costs. This program helps people who have Medicare Part D prescription drug coverage pay for premiums, deductibles, coinsurance and copayments.
Some people qualify for Extra Help automatically. You’re eligible if you:
- Have full Medicaid coverage
- Get help paying Medicare Part B premiums through a Medicare savings program
- Receive Supplemental Security Income (SSI)
If you’re automatically approved, you’ll get a letter explaining how much you’ll pay for prescription drugs along with other details about your Medicare drug plan. And if you’re not automatically approved, you can still apply for Extra Help benefits.
Types of Medicare Savings Programs
There are four savings programs available for Medicare recipients. Each one covers a different set of costs related to Medicare expenses.
Qualified Medicare Beneficiary (QMB): This program helps with Medicare Part A and Part B premiums, deductibles, coinsurance and copayments for services and items that Medicare covers.
To qualify, individuals must have income at or below 100% of the federal poverty level (FPL) and meet specific resource limits. This program is particularly beneficial for those with especially low income, providing extensive financial relief from Medicare costs.
If you’re eligible for this program, then:
- You can’t be billed for services and items Medicare covers, including deductibles, coinsurance and copayments.
- You may get a bill for a Medicaid copayment if one applies.
- You’ll be eligible to receive aid through the Extra Help program.
You’ll need to show your healthcare provider your Medicare card and Medicaid or QMB card each time you get care to have your eligible costs covered by the program.
Specified Low-Income Medicare Beneficiary (SLMB): This program helps pay for Medicare Part B premiums. You must have Medicare Parts A and B to qualify. Specifically, it offers support to individuals with income between 100% and 120% of the FPL.
If you’re eligible, you’ll also get Extra Help benefits and have your prescription drug costs capped for each medication your Medicare drug plan covers. SLMB is ideal for those who have slightly higher income than QMB recipients but still need help managing their healthcare expenses.
Qualifying Individual (QI): The QI program helps pay for Part B premiums and you must have both Part A and Part B to qualify. It covers individuals with income between 121% and 135% of the FPL.
Unlike other MSPs, funding for the QI program is limited and granted on a first-come, first-served basis. Applicants must reapply each year, and those who received benefits the previous year get priority.
If you qualify, you’ll also get Extra Help benefits. But, you are NOT eligible for this program if you also receive Medicaid. You may, however, qualify for another Medicare savings program.
The QI program helps individuals whose income exceeds the SLMB threshold but still require financial assistance.
Qualified Disabled & Working Individual (QDWI): This program helps pay for Medicare Part A premiums. It is designed for disabled individuals under 65 who have returned to work and lost their premium-free Medicare Part A coverage.
You may qualify for the program if you:
- Have a disability
- Are working
- Were receiving Social Security disability benefits and Medicare premium-free Part A benefits, but lost them because you returned to work
Additionally, you must have income below 200% of the FPL and meet specific resource limits.
This program helps cover the cost of Medicare Part A premiums, enabling disabled individuals to maintain their healthcare coverage while rejoining the workforce.
Who Is Eligible for Medicare Savings Programs?
Eligibility for Medicare savings programs is largely based on your income and financial resources, though there are also some general requirements you’ll need to meet. For instance, you must:
- Live in a U.S. state or the District of Columbia
- Be age 65 or older
- Receive Social Security Disability benefits
Medicare considers your monthly income, financial resources and marital status when determining eligibility. A separate cap on monthly income and resources applies to individuals and married couples. Resources include any money you have in a checking, savings or retirement account, and stocks or bonds that you own. Items that are excluded from your resource total include:
- Your home
- One car
- A burial plot
- Up to $1,500 in savings that you’ve earmarked for burial expenses
- Furniture
- Household and personal items
The income and resource limits vary by program, and they’re adjusted regularly for inflation. States can decide which forms of income or financial resources to count toward your total. So even if you think you don’t qualify based on the limits published by Medicare, it may still be worth applying.
Medicare Savings Program Income and Resource Limits 2024
Medicare provides information about income and resource limits online. Here are the current limits assigned to each program for 2024:
Qualified Medicare Beneficiary
- Individuals: $1,275 monthly income; $9,430 resource limit
- Married couples: $1,724 monthly income; $14,130 resource limit
Income limits are slightly higher in Alaska and Hawaii.
Specified Low-Income Medicare Beneficiary (SLMB) Program
- Individuals: $1,526 monthly income; $9,430 resource limit
- Married couples: $2,064 monthly income; $14,130 resource limit
Income limits are slightly higher in Alaska and Hawaii.
Qualifying Individual
- Individuals: $1,715 monthly income; $9,430 resource limit
- Married couples: $2,320 monthly income; $14,130 resource limit
Income limits are slightly higher in Alaska and Hawaii.
Qualified Disabled & Working Individual (QDWI) Program
- Individuals: $5,105 monthly income; $4,000 resource limit
- Married couples: $6,899 monthly income; $6,000 resource limit
Income limits are slightly higher in Alaska and Hawaii.
How to Apply for Medicare Savings Programs
If you think you may qualify for a Medicare Savings Program, you’ll need to complete your state’s application for benefits. You should be able to do so through the same agency that handles Medicaid applications. That may include your local department of social services or health department.
When completing the application, you’ll need to provide information about your household and financial situation. That includes specifying whether you’re applying as an individual or married couple and sharing details about how much income you have, where it comes from and any financial resources you have access to.
You can apply for Extra Help at the same time if you’d like help with Part D prescription drug costs. You can submit that application online through the Social Security Administration website.
Tips for Using a Medicare Savings Plan
Here are six general tips to help you prepare for and effectively use an MSP:
- When in doubt, apply: Eligibility requirements vary by state and program, so it can be hard to verify. If you aren’t sure which program you qualify for, fill out an application. If you’re eligible, you’ll be matched to a program based on your income, assets and other information in your application.
- Gather necessary documentation: Collect all required documents for your application, such as proof of income, assets and residency. Having these ready can streamline the application process and avoid delays.
- Understand your benefits: Familiarize yourself with what your specific MSP covers. Whether it’s premiums, deductibles or copayments, knowing the details can help you plan your healthcare expenses more effectively.
- Reapply annually: Some MSPs, like the QI Program, require annual reapplication due to limited funding. Mark your calendar to reapply each year to ensure continued benefits.
- Consult a financial advisor: A financial advisor can provide personalized guidance, helping you navigate the complexities of MSPs. They can assist with the application process and help you maximize your benefits.
- Stay informed about changes: Medicare policies and state-administered MSPs can change. Keep yourself updated on any modifications to eligibility criteria or benefits to make sure you’re receiving the support you need.
Bottom Line
Medicare savings programs can provide financial relief for people who may need help affording health care costs. Having some basic knowledge of how they work can make it easier to choose which program to apply for should you choose to do so.
Retirement Planning Tips
- A financial advisor can help you understand your Medicare benefits or offer guidance on choosing which Medicare plan to enroll in. They can also help aid you in maximizing your Social Security benefits to get the most money for retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Medicare and Medicaid are both federal programs that help with health care costs but they’re not the same. Medicare, for instance, does not help with long-term care costs but Medicaid can.
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