Benefit Bulletin: July/August 2019

Benefit Bulletin: July/August 2019

Rick Delaney, Chairman of the Board

Proposal Would Make it Harder To Qualify For Medicare Savings Programs

The Trump Administration has proposed a change that would make it harder for older adults with low incomes to qualify for Medicare Savings Programs, Medicaid, and Medicaid-covered stays in nursing homes.  President Trump’s budget proposal for fiscal year 2020 would change the way the federal government measures poverty by switching to the more slowly-growing “chained” consumer price index (CPI) to adjust the federal poverty levels.  Over time, the federal poverty levels would grow more slowly, and this would make it harder for low-income Medicare recipients to qualify for “safety-net” benefits.

The proposed change would shift to the “chained CPI,” which rises more slowly than the current CPI used to adjust federal poverty levels.  This proposal could strip the benefits of millions of Medicare recipients whose income is so low that they also receive benefits through Medicaid — about 1-in-5 beneficiaries in Medicare today.  Twenty-two percent of people age 65 and up qualify for Medicare Savings Programs that help pay the Medicare Part B premium.  The programs also help cover some, or all, of Medicare Part A and Part B out-of-pocket cost requirements when income is low enough to qualify.  Medicaid also is the main source of assistance for nursing home stays which aren’t covered under Medicare, and benefits even middle-income retired households that have been made poor due to high healthcare costs.

The current measure of poverty, created in the early 1960s, can’t be called overly-generous.  In 2019, the federal government defines the federal poverty level as $12,490 for an individual, and just $16,910 for a couple.  Under the official poverty measure, there is no deduction in income for out-of-pocket medical expenses which consume, on average, about one-third of the Social Security income of Medicare recipients.

TSCL’s 2019 Senior Survey found that a majority of survey participants (58%) rated federal and state programs that assist with medical and prescription drug costs as a top, or very important priority.  For years, TSCL has firmly opposed the use of the “chained” CPI to adjust Social Security benefits because it would “chain the COLA.” Over time, changing to a slower-growing CPI would cut Social Security benefits by about 7% to 9% over the course of a 30-year retirement, according to studies by Advisor editor Mary Johnson.  In like manner, using the chained CPI to adjust federal poverty levels could be expected to reduce the rate of growth in poverty levels, leaving low-income older adults with nowhere to go for help when facing high healthcare costs or nursing home care.

TSCL is monitoring this proposal and continues to work with Members of Congress to ensure low income Medicare beneficiaries can get help with Part B premiums, out-of-pocket costs, and nursing home stays.  We urge you to contact your Members of Congress and let them know what you think about the idea to “chain” down the federal poverty limits.