State Medicaid programs will spend about $175 billion this year on health care for dual eligibles – low-income seniors and persons with disabilities who receive benefits from both Medicare and Medicaid. State spending on dual eligibles falls primarily in three areas: long term services and supports (nursing home, home health, personal care, and home and community-based services), behavioral health, and Medicare cost sharing.
Things get complicated quickly as there are types of “dual eligibles,” each treated differently in terms of what Medicare and Medicaid pays for. Federal law requires state Medicaid agencies to cover most Medicare premiums, deductibles, and co-payment for most dual eligibles. For some types of dual eligibles, the state has options to cover more than the federal minimums. This is further complicated by interaction of Medicare and Medicaid benefit designs, differences in what and who is covered under Medicaid State Plans, differences between Medicaid and Medicare provider rates, and the treatment of post-eligibility contributions to cost of care in a skilled nursing facility.
Full-Benefit Dual Eligibles:
Full-benefit dual eligibles – those who are fully enrolled in both Medicare and Medicaid – are the most common group, representing about 7.2 million of the nation’s 9.4 million dual eligibles. They are fully eligible for both programs, meeting the respective eligibility standards for both programs. There several pathways for Medicare eligibility but far more for Medicaid. About 60 percent of full-benefit dual eligibles are low-income seniors and the other 40 percent are persons under 65 with severe disabilities.
Full-benefit dual eligibles have no cost sharing in Medicare Part A or Part B. The state Medicaid program pays for their Medicare Part A hospital deductible, Medicare Part A coinsurance, Medicare Part B monthly premium, and Medicare Part B deductible and 20 percent co-payments.
For the Medicare Part D prescription drug benefit, full-benefit dual eligibles are exempt from any monthly premium, annual deductible, costs under the doughnut hole, and all but nominal co-payments on drugs if they live at home. Under the Medicare Modernization Act (MMA), state governments must help cover the cost of drug benefits for full-benefit dual eligibles. These “claw back” payments from states to the Center for Medicare and Medicaid Services (CMS) total over $6 billion annually.
Qualified Medicare Beneficiary (QMB Only):
Qualified Medicare Beneficiaries (QMBs) are individuals enrolled Medicare Part A, have income of 100% of the Federal Poverty Level (FPL) or less, and have assets that do not exceed three times the limit for Supplemental Income Security (SSI) eligibility. QMB Only individuals are not otherwise eligible for full Medicaid benefits under the State Plan.
Medicaid pays their Medicare Part A premiums (if any) and Medicare Part B premiums. To the extent consistent with payment rates under the Medicaid State Plan, the state Medicaid program also pays for Medicare deductibles, co-pays and coinsurance for Medicare services provided by Medicare providers.
For the QMB Only population, Medicaid does not pay for services not covered by Medicare Part A or Part B.
QMB Plus (Qualified Medicare Beneficiary with Medicaid):
A “QMB Plus” is an individual who meets the QMB eligibility described above but is also eligible for benefits covered through their state’s Medicaid program.
For QMB Plus beneficiaries, Medicaid pays the Medicare premiums, co-pays, coinsurance, and deductibles the same as it does for the QMB Only population. However, unlike the QMB Only population, QMB Plus individuals may also receive Medicaid services.
Qualifying Individuals (QI):
Qualifying Individuals (QIs) are Medicare beneficiaries with incomes above 120% and less than 135% of the FPL. They must also meet an asset test (in 2013, $7,080 for an individual and $10,620 for a couple). Using an annual, capped allocation of federal funds, state Medicaid programs pay for the Medicare Part B premiums of QI beneficiaries. There are individuals who do not otherwise meet Medicaid eligibility levels and therefore receive no Medicaid benefits.
Specified Low-Income Medicare Beneficiary (SLMB):
A Specified Low-Income Medicare beneficiary (SLMB) is an individual who is enrolled in Medicare Part A and Part B, has income that exceeds 100% of the FPL but is less than 120% of the FPL, and whose resources do not exceed a specified limit. For SLMBs, Medicaid pays the individual’s monthly Medicare Part B premiums.
A “SLMB Plus” is a Medicare beneficiary who meets SLMB eligibility and also also meets the financial criteria for full Medicaid coverage. Like with QI and SLMB Only individuals described above, Medicaid pays for the monthly Medicare Part B premium.
However, SLMB Plus population is also entitled to all benefits available to fully eligible Medicaid recipients under the State Plan. Typically, this is by qualifying for Medicaid by spending down excess income to the medically needy income level or by qualifying as an institutionalized person under a specific income level set in the State Plan.
Therefore, for the SLMB Plus population, the state Medicaid program provides full Medicaid benefits. The state pays Medicaid rates for Medicaid services provided by Medicaid providers. For services covered by both Medicare and Medicaid, Medicaid will only pay to the limit set in the State Plan. Since Medicare payments are typically in excess of Medicaid rates, the state will consider the any Medicare payments to a provider as payment in full.
Learn More About Dual Eligibles and Cost Sharing:
State Medicaid coverage of Medicare cost sharing for different types of dual eligibles is highly complex and, for some populations, varies by state. To learn more, CMS has a technical FAQ on Medicare Cost Sharing for Dual Eligibles. For your inner wonk, it has an especially helpful, detailed description of federal policy and state options.
In addition, there are other programs to help low-income Medicare beneficiaries pay for Medicare cost sharing. Examples include the Medicare Part D low-income subsidy and the Qualified Disabled and Working Individuals (QDWI) program.
It is important to note that the savings for low-income Medicare beneficiaries are available whether the individual receives the Medicare Part A and B services through traditional Medicare fee-for-service or a Medicare Advantage health plan. However, for most Medicare consumers, Medicare Advantage plans offer lower overall cost sharing than unmanaged fee-for-service.
Of course, for Medicare beneficiaries, the best sources of consumer information is the Medicare.gov website, the 800-MEDICARE hotline, state Medicaid eligibility offices, and their State Health Insurance Assistance Program (SHIP). SHIP offices offer one-on-one counseling and assistance to Medicare beneficiaries and their families.