Medicare Savings Plans: Correcting Misleading Information and Misinformation Related to Income and Resource Eligibility
Description: The article highlights how widespread misinformation on government and non-government websites leads to the wrongful denial or underutilization of Medicare Savings Programs (MSPs).
Introduction
The Medicare Savings Program (MSP) is a Medicaid-administered program available to
Medicare beneficiaries with limited income and, in most states, limited resources. If a
Medicare beneficiary qualifies, this program will pay the Medicare Part B premium.
Additionally, depending upon the sub-program for which the recipient is eligible, it may
also pay for other cost-sharing expenses. Thus, it is of paramount importance that
States apply all the appropriate income exclusions to arrive at the correct countable
income for eligibility purposes. It is equally important that States apply the correct
countable resource limit (or no resource limit in some States) when determining MSP
eligibility. Note: A person who is enrolled in one of the three MSPs discussed in this
article is also “deemed” eligible for the full Low-Income Subsidy (Extra Help) program
for the Medicare Part D prescription drug program.
Background
Medicare Part B, Supplemental Medical Insurance, is optional and subject to payments
for premiums, coinsurance, copays, and deductibles. When a person enrolls in Part B,
one of three Medicare Savings Programs are potentially available to limit out-of-pocket
expenses. MSPs are implemented by the State or local Medicaid program.
This article discusses three MSPs: the Qualified Medicare Beneficiaries (QMB)
program, the Specified Low-Income Medicare Beneficiaries (SLMB) program, and the
Qualified Individuals-1 (QI-1) program. QI-1 is subject to the annual funds allocated for
the program and may run out of money, in some states, before a year is over. Each of
the three MSPs will pay monthly Part B premiums for eligible beneficiaries. QMB will
also cover Part B coinsurance, copays, and deductibles, as well as Part A premiums,
coinsurance, and deductibles. A fourth MSP, the Qualified Disabled and Working
Individuals (QDWI) program, which pays for Part A premiums (but not Part B premiums)
for eligible persons who buy into Medicare through the “Premium HI for the Working
Disabled” program, is not discussed in this article. POMS HI 00815.024,
We will look at two narrow sets of issues related to MSP eligibility:
The federal countable income limits for 2022 and the federally mandated income
exclusions to be used in determining countable income; and
The lowest countable resource limit federally allowed, and State options to have
higher resource limits or no limits at all.
We will share examples of misleading information and misinformation, much of it found
on many government and non-government websites. We will then suggest strategies to
use when decision makers use the bad or misleading information to make eligibility
decisions.1
MSP Income Eligibility Criteria
The countable income limits described below are based on the Medicare MSP page,
https://www.medicare.gov/your-medicare-costs/get-help-paying-costs/medicaresavings-programs. Those limits are higher in Alaska and Hawaii. States can expand
eligibility to beneficiaries with higher incomes – e.g., as of 2021, four states and the
District of Columbia had raised the qualifying Federal Poverty Level (FPL) limits above
the federally defined minimum levels described below.2 States cannot lower the
federally-authorized income limits for MSP eligibility.
The Qualified Medicare Beneficiary Program
Countable income limit. QMB eligibility is based on countable monthly income at or
below 100 percent of the current year’s FPL - $1,133 per month in 2022 for an individual ($1,506 for a married couple). As noted above, States may establish higher
levels of maximum monthly income.
Must follow SSI rules to determine countable income. Federal law, regulation, and
policy require Medicaid decision makers to apply SSI rules to determine countable
monthly income to determine QMB eligibility (also applies to SLMB and QI-1 eligibility
determinations). POMS HI 00815.023 B,
https://secure.ssa.gov/apps10/poms.nsf/lnx/0600815023. 3
Key unearned and earned income exclusions:
The $20 general income exclusion (GIE).
Any part of $20 GIE not used to reduce unearned income reduces earned income.
The first $65 and an additional 50 percent of monthly gross earnings.
Other applicable SSI work incentives, including impairment related work expenses and blind work expenses.
The Specified Low-Income Beneficiaries Program
Countable income limit. SLMB eligibility is based on countable monthly income that is at or below 120 percent of the current year’s FPL - $1,359 per month in 2022 for an individual ($1,831 for a married couple). States may establish higher levels of maximum monthly income.
Must follow SSI rules to determine countable income. See the discussion and policy references under the QMB section above.
The QI-1 Program
Countable income limit. QI-1 eligibility is based on countable monthly income that is at or below 135 percent of the current year’s FPL - $1,529 in 2022 for an individual ($2,060 for a married couple). States may establish higher levels of maximum countable income.
Must follow SSI rules to determine countable income. See the discussion and policy references under the QMB section above.
Misleading Information or Misinformation About Income Eligibility
The following MSP monthly income eligibility chart was posted on the Centers for Medicare and Medicaid (CMS) website in early 2022, https://cmsnationaltrainingprogram.cms.gov/sites/default/files/shared/2022_Medicare%2 0Savings%20Program%20Income%20Limits_508_FINAL_0.pdf:
MSP | Individual Monthly Income Limits | Married Couple Income Limits |
QMB | $1,153 | $1,546 |
SLMB | $1,379 | $1,851 |
QI-1 | $1,549 | $2,080 |
Comparing these figures to the countable income limits, noted above, CMS simply added $20 to each of the countable income limits for the three programs. By doing this, CMS suggests to readers that only the $20 general income exclusion can be used to reduce countable income.
The chart’s lead-in language states: “If you have income from working, you still may qualify for these … programs even if your income is higher than the income limits listed below.” CMS does not explain that all SSI earned income exclusions must be used, which will reduce countable earnings by 50 percent or more.
NOTE: The authors looked at more than 40 national and in-State governmental and non-governmental websites from around the country that listed MSP monthly income eligibility information. Some, like the CMS site, provide something like the chart above with a reference elsewhere on the site to the availability of SSI earned income exclusions. Others simply repeat the number from the chart with no reference to SSI’s earned income exclusions. Many service providers rely on this misleading or, in some cases, incorrect information to advise the persons they serve.
A real case using CMS chart information, without applying earned income exclusions (2022 figures used). This comes from a Western New York agency (co-author, Jim Sheldon’s former employer). Leonard, who sought MSP eligibility, received
$745 of Social Security Disability Insurance (SSDI) and $850 of gross earned income per month, working as a part-time dispatcher for a trucking company. He also retained
$80,000 in a 401k established prior to stopping work and obtaining SSDI. His countable monthly income was $1,117.50: $725 in unearned income ($745-20) and $392.50 in earnings ($850-65 = 785/2 = $392.50). He would be QMB eligible as his countable income was less than QMB’s 2022 monthly limit of $1,333. The $80,000 in his 401k would not count as New York has opted to have no MSP resource limit. (Remember: Many states have MSP resource limits.)
When Leonard contacted Jim’s agency, his Part B premiums were coming out of his SSDI payment, and he had been taking money out of his 401k to meet extra medical expenses such as Part B coinsurance. The Medicaid agency’s well-intentioned MSP eligibility specialist told Leonard he needed to reduce his work hours to bring his combined income below $1,549, making him eligible for QI-1, based on the CMS-type chart used to determine eligibility. The advocate called the eligibility worker and, armed with State policy laying out the requirement to apply SSI earned income exclusions, was able to get the eligibility worker to retract the denial and approve the application and make him eligible for QMB, the best of the three MSPs. This allowed Leonard to save
$170.10 on monthly Part B premiums and roughly another $100 per month on average Part B copays and coinsurance – an annual savings of $3,241!
Medicare Part D savings. The added benefit to Leonard, upon establishing eligibility for QMB, was automatic eligibility for the full Part D Low-Income Subsidy or Extra Help program. Since MSP is considered a form of Medicaid, his dual eligibility for Medicare and Medicaid made him automatically eligible for this program.4 Eligibility for the Low—Income Subsidy was expected to save Leonard an additional $1,500 or more per year.
MSP eligibility for persons with higher earnings and no unearned income. Some persons will lose their right to an SSDI payment if they have substantial gainful activity level earnings after their nine-month trial work period, benefit cessation month, and grace period. Readers must be diligent to make sure all the SSI earned income exclusions get applied to those cases in the MSP eligibility process. For example, the former SSDI beneficiary with gross earnings of $1,885 per month would be found not eligible for all three MSPs if the eligibility worker used only the $20 general income exclusion suggested by the CMS eligibility chart. In fact, this person’s countable income would be $900 per month ($1,885 – 20 – 65 = 1,800/2 = $900), making them eligible for QMB, the best of the MSPs. Of course, if the person resides in a state with an MSP resource limit, they could be ineligible if their countable resources are above that limit.
MSP Resource Eligibility Criteria and State Options
The countable resource limits described below are based on Medicare’s MSP page, https://www.medicare.gov/your-medicare-costs/get-help-paying-costs/medicare-savings-programs. Those resource limits are higher in Alaska and Hawaii.
The lowest countable resource limit federally allowed in 2022. That amount is
$8,400 for all three MSPs – QMB, SLMB, and QI-1.
State option to have a higher countable resource limit or no resource limit at all. As of 2021, 10 states and the District of Columbia had eliminated the resource or asset test for MSPs and three states had adopted a resource limit above the federally defined minimum level.5
Must follow SSI rules to determine countable resources. While Medicare’s MSP page, referenced above, suggests a limited list of resources to be excluded in MSP eligibility determinations (referencing only the home, one car, a burial plot, $1,500 in burial expenses, furniture, and other household and person items), federal policy is clear that all SSI resource exclusions must be allowed.6
Misinformation or Misleading Information About Resource Eligibility
On Medicare’s MSP page (see link above), the $8,400 resource limit for QMB, SLMB, and Qi-1 is noted, with no explanation of state options for higher limits or eliminating the resource limit. In CMS’s MSP eligibility chart, referenced earlier, it states: “Resource limits for QMB, SLMB, and QI are $8,400 for an individual and $12,600 for a married couple.” Below that it adds: “States have flexibility in determining … resource limits for aged, blind or disabled applying for [MSPs].” CMS does not explain that some States have raised resource limits above the $8,400 minimum or that other states have opted to have no resource limits for MSPs.
NOTE: As stated above, the authors looked at more than 40 national and in-State websites from around the country that listed MSP monthly income eligibility information. Most of those sites, also listed resource eligibility information. Some, like CMS site, provide something like the language above about state options. Others simply repeat the $8,400 resource/asset limit with no further explanation. The result of this last approach, we fear, is illustrated in the real case example below.
A real case using CMS chart information and ignoring the state’s option to have no resource limit (2022 figures used). This case involved an attorney, who is part of the Western New York Elder Law advocacy community and his need to intervene on behalf of his mother to ensure that proper resource eligibility criteria was applied to her case (New York opted, more than a decade ago, to eliminate its MSP resource limit). This 90-year-old woman, whom we will call Ella, sought MSP eligibility through an out-of-State contractor hired by her Medicare Advantage Health Maintenance Organization (HMO) to facilitate MSP enrollment. The contractor’s MSP enrollment specialist told Ella that she was not eligible for the QI-1 program as her countable resources, her bank account balance, exceeded the MSP $8,400 limit.
Ella’s son, who had years of Medicare advocacy experience, knew that New York did not have an MSP resource limit. He reached out to the MSP enrollment specialist to provide them with this information and the source of the State policy. Fortunately, with this intervention, Ella’s QI-1 application was approved. Ella saved more than $2,000 per year on Part B premiums. Her bigger savings (about $3,000 or more per year) came when she, like Leonard above, became eligible for the full Part D Low-Income Subsidy as dually eligible for Medicare and an MSP (a Medicaid program), with savings on Part D premium costs, prescription co-pays, and deductibles.
Suggested Strategies When MSP Decision Makers Rely on Incorrect Income or Resource Criteria
Many readers will wonder: How many Leonards and Ellas are out there and will either not apply for an MSP or will abandon an MSP application because of misinformation or misleading information about how countable income or resources are determined?
Based on underutilization of the MSPs in many states (see KFF article referenced in note 2, above), we suspect those numbers could be extremely high in some states.
For the individual MSP denial. Assume you learn that an MSP eligibility worker has failed to apply the SSI earned income exclusions to countable income determinations, and/or has failed to take account of their State’s decision to increase an MSP resource limit or have no resource limit. What can you do?
Assuming your funding source and your supervisor allow you to get involved in direct advocacy, you can take the approach outlined in the examples above. If you can confirm that your State has an online policy that provides for the use of SSI’s earned income exclusions and/or provides for a higher resource limit or no resource limit, you can take the advocacy steps that worked in the two case examples. Identify the proper policy online and make that policy or policies available to the decision maker, urging them to rescind the decision and issue an approval. If that effort is not successful, the usual advocacy approach would be to go up the supervisory ladder providing the same governing policy to that higher authority.
If the decision at the supervisor level continues to be a denial, the next step would be to take the matter to a fair hearing. Given the clarity of the policy, the situation should not get to this point. If a hearing is needed and neither you nor another person at your agency can represent the person at a hearing, we urge you to reach out to an advocacy agency that may be able to do so at no cost, such as your state Protection and Advocacy program, a Legal Services program, or another advocacy program in your State or region.
If the decision is based on bad State policy. It is possible that what you see as an incorrect application of policy is based on a written State MSP policy that is flawed. That policy may only provide for the $20 general income exclusion, as suggested by many websites. Or the policy relied on may reference the $8,400 federal minimum resource limit, without noting the higher resource limit established by your State or your State’s option to have no resource limit. It is always possible that your State amended its MSP resource rules, but the decision maker is relying on an outdated policy that may still be posted on the State’s website (this can happen) or is kept on the decision maker’s desk or in their file drawer.
Conclusion
Systemic advocacy is essential in many states to correct the misleading and incorrect information about MSP income and/or resource levels. If your funding source and supervisor allow this type of work and you can devote the time to it, this can be some of the most effective and satisfying work a benefits counselor performs. If you are successful at getting a State agency to conform its policy to federal standards or reflect the options a State has chosen, your work can impact hundreds of individuals who might otherwise be harmed by a wrongful denial of an MSP application. When, for example, the earned income exclusions are enforced statewide, more SSDI beneficiaries are encouraged to work.
Here are a couple of advocacy strategies to make positive changes in your State. First, there is a very good chance that others in your State’s advocacy community are involved in this type of work. Find out who they are and reach out to them. Second, the Medicaid agency responsible for MSP policy may have created a system you can use to alert them to problems with policy implementation. Consider using that system.
Ultimately, you want to find a path to the person or persons most likely to facilitate a change that will result in MSP decision makers using the correct policies.
Every benefits counselor will encounter MSP issues in their work. We urge you to help identify any of the barriers to MSP eligibility, in your State, and play whatever role you can to eliminate them on a systemic level. And, let us know about your efforts and successes.
Dated: July 19, 2022
Authors: James R. Sheldon, JD (Board Member), Disability Consultant and Edwin J. Lopez-Soto, JD (NABWIS member), Extension Faculty, Cornell’s Yan Tan Institute (YTI)
Footnotes:
1 - For a broader look at MSPs, see Understanding the Medicare Savings Programs (Virginia Commonwealth University, WIPA National Training and Data Center, January 2022), https://vcu-ntdc.org/resources/viewContent.cfm?contentID=133.
2 - Kaiser Family Foundation (KFF), Help with Medicare Premium and Cost-Sharing Assistance Varies by State (April 20, 2022), https://www.kff.org/medicare/issue-brief/help-with-medicare-premium-and-cost-sharing-assistance-varies-by-state/ (and references cited in article).
3 - See also 42 US Code 1396d(p)(1)(B); 42 Code of Fed. Regulations 435.601(b)(2); and Manual for State Payment of Medicare Premiums (formerly called “State Buy-in Manual”), https://www.cms.gov/medicare-medicaid-coordination/medicare-medicaid-coordination-office/state-payment-medicare-premiums (9/8/20 update), at 1.6.2 (“States must use income and resource methodologies and requirements no more restrictive than SSI’s for MSP determinations").
4 - NOTE: In New York, Leonard was most likely eligible for the state’s Medicaid Buy-In for Working People with Disabilities program, making him dually eligible for Medicare and Medicaid and the full Part D Low-Income Subsidy program on that basis alone. Keep in mind that if Leonard was only eligible for QI-1, based on higher countable income, he could not be eligible for both Medicaid and QI-1 and would need to seek one or the other. A further discussion of Part D or the Medicaid Buy-In program is beyond the scope of this article.
5 - See KFF, Help with Medicare Premium and Cost-Sharing Assistance Varies by State, note 2 above.
6 - See Manual for State Payment of Medicare Premiums, note 3 above at 1.6.2 (“States must use income and resource methodologies and requirements no more restrictive than SSI’s for MSP determinations").
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