October 1, 2002
Robert Friedland, Laura Summer
The Role of the Asset Test in Targeting Benefits for Medicare Savings Programs, Laura Summer and Robert Friedland, Center on an Aging Society, Georgetown University, The Commonwealth Fund, October 2002
Beginning in 1988, Congress established a series of programs, collectively known as the Medicare Savings Programs, to provide financial assistance to Medicare beneficiaries who struggle to pay Medicare premiums and out-of-pocket costs but who do not qualify for full Medicaid assistance. The Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), and Qualifying Individuals (QI) programs provide assistance to Medicare beneficiaries with incomes below 175 percent of the federal poverty level and with assets up to $4,000 per individual or $6,000 per couple. When the programs were created, income and asset limits were set to ensure that assistance would be given to the individuals with the greatest needs. According to a new report, however, less than half (48%) of those who meet income requirements also meet asset limits, meaning that a substantial proportion of low-income individuals are unable to get help from the programs.
In the new Commonwealth Fund study, The Role of the Asset Test in Targeting Benefits for Medicare Savings Programs
, researchers Laura Summer and Robert Friedland of Georgetown University's Center on an Aging Society report that, although the federal rules for asset tests have not been changed since 1988, more than 20 states have modified the tests or otherwise tried to ease enrollment for low-income beneficiaries. The authors review various modifications to the asset test that could extend help to more low-income beneficiaries. Raising the asset limits to reflect growth in the economy from 1988 to 1998, for example, would add 230,000 people to the 5.2 million who are currently eligible for the program. Other potential adjustments to the asset test include:
- exempting retirement funds from asset tests;
- adjusting for economic growth and exempting retirement funds from asset tests;
- doubling the asset limits; or
- eliminating the asset test.
The authors note that low-income beneficiaries are twice as likely as high-income beneficiaries to be single, older women in fair or poor health. They conclude that modifying the asset tests would provide access to care for the most vulnerable beneficiaries and discourage beneficiaries from liquidating assets in order to become eligible for the programs.Facts and Figures
- Medicare beneficiaries age 65 and older spend out-of-pocket 22 percent of their incomes for health care, and more vulnerable groups spend an even greater proportion.
- Doubling the asset limits would increase the pool of potentially eligible QMB/SLMB/QI beneficiaries by about 1 million.
- Eliminating the asset test would increase the pool of potentially eligible QMB/SLMB/QI beneficiaries by nearly 6 million.