Medicare and Medicaid are two government programs that lots of people get confused.
Both programs began in 1965, but one specifically addresses older Americans, while the other addresses low-income Americans. The Extra Help program helps Medicare beneficiaries with the cost of prescription drugs. (This post has been updated in 2019.)
Medicare is a federal health insurance program for people age 65 and over as well as people with certain disabilities.
Medicaid is a social welfare program that provides free or low-cost health coverage for people and/or families with low incomes. It is administered jointly by both the federal and state governments. Unlike Medicare, there is no age requirement for Medicaid. In fact it offers insurance to many children via the CHIP program.
Some people qualify for both Medicare and Medicaid. When they do, the two programs work together to deliver excellent health coverage.
While Medicare will be your insurance, your Medicaid will pay for your costs associated with Medicare. This includes your Medicare Part A or B premiums, deductibles and coinsurance costs.
You will have a smaller network of doctors though, because you will need to find doctors on Medicare that also participate in Medicaid.
People who qualify for both Medicare and Medicaid are called Full Duals or QMB, meaning Qualified Medicare Beneficiary. They have no copays for Medicare-covered services that you get from doctors who participate in both Medicare and Medicaid. You can also take advantage of other non-medical Medicaid benefits, such as long-term care assistance and food benefits.
Other Levels of Medicare Savings Programs
If you don’t qualify for full Medicaid, you may still be able to get assistance with part of your Medicare costs. Based on your state’s limits on income and asset levels, you can qualify you for one of the other Medicare Savings Programs. These help to pay for some of the out-of-pocket costs associated with Medicare.
Specified Low Income Medicare Beneficiary (SLMB): Medicaid will pay for your Medicare Part B premium.
Qualifying Individual (QI): Medicare will pay for your Medicare Part B premium.
Qualified Disabled and Working Individuals (QDWI): may help to pay for Part A premiums if you are a working disabled person who lost your premium-free Part A when you went back to work.
(All levels automatically qualify for Medicare Extra Help with Part D – read more on that program further below.) To apply for Medicaid, contact your local offices of the Department of Health and Human Services.
Your Medicaid application will ask for some specific financial information. Resources that can help to determine you eligibility are checking accounts, savings accounts, stocks and bonds.
They will also count mutual funds and any individual retirement accounts that you own. There are also certain resources which do NOT count toward eligibility, such as your home, your car, your burial plot, and personal possessions like furniture, household items and personal items.
Some people may not have income and assets low enough to qualify for a Medicare Savings Program but can still qualify for the Medicare Extra Help for Part D program. You can contact Social Security to apply for this program.
How to Apply for Medicaid
You can apply for Medicaid at any time of year. Get an application for Medicaid by calling your state’s Medicaid office. You may also visit the healthcare.gov website and fill out an application through the health insurance marketplace.
Before you apply, you will need to gather information such as proof of age, citizenship and income. You must provide proof of residence and information about any other insurance you may have, such as Medicare.
Programs and benefits vary by state, so be sure to review your state’s Medicaid terms.
If I have Medicaid, do I need Medicare Part D?
Yes you do. Medicare requires you to enroll in Part D. If you don’t, they will automatically select a plan for you. It’s better for you to choose a plan yourself so you can get one that covers your specific medications.
The good news is that people with Medicaid automatically qualify for the Medicare Extra Help for Part D program as well. Even though you can qualify in this manner, the program is not Medicaid Extra help. It is called Medicare Extra Help.
Medicare Extra Help for Part D: The Low-Income Subsidy
The Low Income Subsidy can easily save you thousands of dollars every year on Part D medications. It does this by first lowering your monthly plan premium.
More importantly, it eliminates any deductible that you might have paid without it as well as the coverage gap. It also lowers the cost of your medications. Let’s take a closer look at what that means to you.
Lowering your Premium: Part D drug plan premiums in 2019 range from around $15/month to over $150/month. The national average premium is around $35/month.
If you are awarded the low-income subsidy, you will pay less for your drug plan. The level of your award is based on your income. A full subsidy award means it will offset your Part D drug plan premium by the national average drug plan premium in your state.
If a person with the Low Income Subsidy has a full subsidy award and selects a drug plan with a monthly premium below that benchmark, then they will pay nothing for Part D.’
No Deductible: Part D drug plans in 2019 can have a deductible up front of as much as $415. The Low Income Subsidy eliminates the deductible for you. You will get your low drug copays from Day One without having to satisfy any deductible.
Coverage Gap: The Low Income Subsidy eliminates the coverage gap, or donut hole. You will never have to worry about paying more for your medications just because your spending goes over a certain amount in one calendar year.
This means you get the same low drug copays all year long, no matter how many medications you are taking. You will never have to worry about the copays that you pay toward your medications going up just because you reached the coverage gap.
Income and Resource Limits for Low Income Subsidy
To qualify for the Low Income subsidy in 2018, your income must be limited to $25,365 if married or $18,735 if not married or living with spouse. Your resources cannot be worth more than $25,720 if married and living with spouse, or $12890 if not currently married or living with spouse.
Medicare Extra Help Example
Joe has a Part D drug plan that costs $29.30/month. It has a $415 deductible which he must satisfy before his drug copays kick in to lower his costs. He also takes a number of expensive brand name medications. His copays for 3 of those medications, even after the deductible, are $45 each.
Because his brand name medications have such a high retail price tag, he usually enters the coverage gap around April. At that time, the cost for his brand name drugs goes up to 25%. This causes him to pay over $100 each for his brand name medications while he is in the coverage gap.
He is living on social security alone and has low income, making it impossible for him to afford his medications. He applies at Social Security for the Low Income Subsidy which will give him help toward Part D. Joe receives a notice in the mail that he has been awarded a full subsidy.
Now Joe will pay nothing for his drug plan because the subsidy amount is more than the cost of his drug plan. The subsidy pays his drug plan premium for him. He is also no longer responsible for any deductible, so he does not need to worry that his plan has a $415 deductible.
The copays for his medications range from $0 to a few dollars each. Even though his medications are expensive and make him reach the gap, he is not responsible for paying any additional costs for those medications. His copays remain the same throughout the year.
Continuous Rolling Election Periods
Joe can also change his drug plan at any time. Other people can only change during the Annual Election Period.
There are lots of aid programs out there to help people who have low incomes. If you think you might qualify, it’s worth contacting Social Security for information on how to apply for them.
Get Help with How Medicare and Medicaid Work Together
Do you still feel uncertain about how Medicare and Medicaid can coordinate to provide your coverage? The next step is for you to contact your local state Medicaid office, or reach out to your local Area Agency on Aging to help you find plans specific in your area.