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Medicare Advantage and Low-Income Medicare Beneficiaries

In This Article:

Medicare Advantage and Medicare Savings Programs: Who Pays for What?

• Medicare Part A Premium
• Medicare Part B Premium
• Medicare Advantage Premiums
• Medicare Advantage Co-payments and Coinsurance
• Medicare Advantage Payment Charts

Medicare Advantage and Medicare Savings Programs: Who Pays for What?

According to the Centers for Medicare & Medicaid Services (CMS), over 1 million duals (people with Medicare and Medicaid) are enrolled in Medicare Advantage plans. Most of these enrollees may also qualify for one of the Medicare Savings Programs (MSPs): Qualified Medicare Beneficiaries (QMB), Specified Low-Income Beneficiaries (SLMBs) and Qualifying Individuals (QI) and Qualified Disabled Working Individuals (QDWIs).

As we see more and more people with Medicare with limited incomes joining Medicare Advantage plans, it is important to understand the connection between MSPs and Medicare Advantage plans – that is, MSPs or Medicaid may pay certain Medicare Advantage charges on behalf of their enrollees.

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Medicare Part A Premium

Some Medicare beneficiaries must pay a Part A premium because they (or their spouse) did not work long enough to qualify for premium-free Part A. These beneficiaries are called voluntary enrollees. Medicaid pays Part A premiums for people with Medicare beneficiaries who are voluntary enrollees and who are enrolled in QMB.

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Medicare Part B Premium

All three Medicare Savings Programs – QMB, SLMB, and QI – pay Part B premiums ($96.40/month in 2009) for people with Medicare enrolled in one of the MSPs.

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Medicare Advantage Premiums

Medicare Advantage plans, including Special Needs Coordinated Care Plans (SNPs) for duals, can charge monthly premiums. Medicaid law allows each state Medicaid agency to decide whether or not the Qualified Medicare Beneficiary program (QMB) will pay Medicare Advantage plan premium for people enrolled in that program.

Medicare Advantage Co-payments and Coinsurance

CMS requires Medicaid to pay Medicare Advantage coinsurance or co-payments to the plan on behalf of Qualified Medicare Beneficiaries. Section 3490 (764Kb PDF file) of the State Medicaid Manual provides authority for this requirement.

In addition, the Health Care Financing Administration (what CMS used to be called) clarified the requirements of Section 3490 in a letter (344Kb PDF file) to Associate Regional Administrators dated June 30, 2000.

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Medicare Advantage Payment Charts

Here are two charts to simplify these concepts and help you to understand how and when Medicare Savings Programs or Medicaid might pay for Medicare Advantage premiums, deductibles, co-pays and/or coinsurance. Medicare Advantage enrollment:

This chart spells out Medicare Savings Program eligibility and corresponding benefits:

• Summary of Medicare Savings Program Eligibility and Coverage

This chart explains how the different Medicare Savings Programs pay for certain Medicare Advantage out-of-pocket charges:

• Medicare Savings Programs and Medicare Advantage Out-of-Pocket Cost Sharing

We've excerpted the pertinent Medicare and Medicaid laws (31Kb Word file).

For a more technical and thorough discussion of MSP coverage for Medicare Advantage cost-sharing, see The Center for Medicare Advocacy’s weekly alert, Dual Eligible’s Cost-Sharing in Medicare Advantage: Who Pays for Dual Eligibles?  (May 31, 2007).

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