Medigap - Medicaid
There are four ways in which Medicare beneficiaries with low incomes can qualify for Medicaid coverage. Under the traditional or "full coverage" mechanism, low-income Medicare beneficiaries who qualify for cash payments such as Supplementary Security Income, or who are deemed to be medically needy by their states, can qualify for Medicaid benefits. The second route is the Qualified Medicare Beneficiary (QMB) program, which is aimed at beneficiaries without full Medicaid coverage whose incomes are at or below the poverty level.
Third, the Specified Low-Income Medicare Beneficiary (SLMB) Program is aimed at those with incomes just above the poverty level (not more than 20 percent higher). Finally, the Qualified Individual Programs (QI-1 and QI-2) covers some individuals with incomes that are 20 to 75 percent higher than the poverty level.
Of the 16.5 percent of Medicare beneficiaries who are also covered by Medicaid, just over half (8.3 percent) are enrolled under the traditional program, almost half (7.4 percent) are eligible through QMB, and 0.8 percent have SLMB coverage. Only a negligible percentage (about 0.1 percent) have QI coverage. Those eligible for full coverage, as well as those with QMB coverage, do not have to pay the Medicare Part B premium or the Medicare deductibles and coinsurance. Furthermore, those with full coverage can take advantage of other benefits provided by their state Medicaid program, such as coverage for preventive services, prescription drugs, and long-term nursing home care. In contrast, those with SLMB and QI coverage do not receive any covered benefits besides those provided by Medicare. Rather, they are just exempted from paying the monthly Part B premium ($50.00 per month in 2001).
Disadvantages to Medicaid supplemental coverage include the cost of this coverage to the state and federal government and the fact that seniors are not permanently eligible for coverage. One way to ensure continuous coverage is to purchase individual Medigap coverage, but this is very expensive and generally not recommended. Otherwise, when individuals lose their Medicaid eligibility they find themselves at considerable financial risk as a result of Medicare's substantial premium and cost-sharing requirements.
Another major problem with Medicaid supplementation is the fact that many individuals who are eligible for this coverage are unaware of the fact. It is estimated that between 1.9 and 2.4 million people are eligible but not receiving QMB benefits, and 1.4 million are eligible for but not receiving SLMB. Altogether, this represents about 45 percent of eligibles. Almost none of the half million people eligible for QI have it. These figures are of concern to policymakers, in part, because these individuals are likely to receive less medical care, but also because of the financial cost. If someone is eligible for but not receiving QMB, SLMB, or QI, they receive $546 less annually in Social Security benefits because the Part B premium is withheld. Furthermore, those who should be receiving QMB are paying the substantial Medicare cost-sharing requirements, or alternatively, have a Medigap policy that they do not need.
Having Medicaid coverage makes a tremendous difference in how much a person has to pay out-of-pocket for medical care. On average, those with Medicaid pay a total of $337 per year out-of-pocket, compared to $1,735 for those with Medicare coverage only. Those below the poverty level who have Medicaid pay an average of only 8 percent of their income towards medical expenses and insurance premiums, compared to 54 percent for poor beneficiaries who have Medigap coverage, and 48 percent for those with HMO coverage.
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