Statement of Senior Citizens League

On behalf of the approximately 1.2 million members of The Senior Citizens League (TSCL), a proud affiliate of The Retired Enlisted Association (TREA), thank you for the opportunity to submit a statement regarding low-income programs available to eligible Medicare beneficiaries. TSCL consists of active senior citizens, many of whom are low income, concerned about the protection of their Social Security, Medicare, and veteran or military retiree benefits.

Some estimates suggest that as many as two-thirds of those eligible for certain low-income programs do not participate—often because they are not aware that such programs exist or believe they will not qualify based on out-of-date information. Frequently, our members contact our office with concerns over having to choose between purchasing prescription medications and paying bills. In some cases, these individuals are eligible for low-income programs but were not aware of the programs’ existence.

MEDICARE SAVINGS PROGRAM (MSP)

With three separate programs for Medicare Part B assistance, the first task seems to be determining which one applies for an individual. For individuals with an annual income level of $10,452 ($871 per month), or $13,932 ($1,161 per month) for couples, the Qualified Medicare Beneficiary (QMB) program exists. Asset levels are set at $4,000 for individuals and $6,000 for a couple. Persons in the QMB program have their Part B premiums, deductibles, and all Medicare cost sharing paid by their state Medicaid program.  According to a May 2004 report by The Commonwealth Fund, it is estimated that 4 million seniors are eligible, based on income alone, for this program.

Specified Low-Income Medicare Beneficiaries (SLMB) are persons whose annual income is at or below 120% of the federal poverty level, or $12,492 ($1,041 per month) for an individual, and $16,668 ($1,389 per month) for a couple. SLMB are subject to the same asset limits as QMB. State Medicaid programs pay SLMB’s Medicare Part B premiums.

The third MSP grouping is Qualifying Individuals (QI). Individuals with an annual income between 120% and 135% of the federal poverty level fall into this category. To qualify, individuals must have an annual income of no more than $14,028 ($1,169 per month), or couples must have an annual income of no more than $18,720 ($1,560 per month). Asset levels remain the same for this group as for the SLMB and QMB. The federal government, and not the state, pays Medicare Part B premiums for persons designated QI.

The federal government sets the income limits for eligibility, application procedures and asset limits. Although income limits are adjusted annually, asset limits, which were set in 1989, have not been indexed since then, according to The Commonwealth Fund, May 2004 issue (“How Asset Tests Block Low-Income Medicare Beneficiaries from Needed Benefits”). The asset limits are burdensome, outdated, and intimidating. Personal disclosure of one’s incomes and assets can also be a major hurdle for many elderly individuals. When asked about the cash value of in-kind contributions and the cash value of life insurance policies, applicants either do not know the value or are embarrassed to report such assistance. Counting the “in-kind” value of meals and support supplied through the generosity of others penalizes the neediest of seniors, and disregards the contributions of those who kindly supply the most basic of needs. In some instances, applicants do not disclose requested information for fear of incarceration, which is mentioned on the application.

Asset limits vary by state. It should also be noted there are a few states that have eliminated or adjusted asset levels for the QMB and SLMB. States also have the option of using less restrictive measures for income and asset levels when determining Medicaid eligibility. In these instances, an individual who does not meet federal asset levels may be eligible for the MSP assistance.

In the vast majority of cases, low-income seniors are not aware that programs exist to assist with premiums. Indeed, just learning the income limits to prepare this statement for the record proved a difficult challenge. When this statement was prepared, there was no link to Medicare Savings Programs posted on the homepage of www.medicare.gov. Information pulled up by use of the website search engine was more than one year old and the income limits out-of-date. By using the search engine for the ‘Frequently Asked Questions,’ only one answer even mentioned MSPs, and it directed us to our state Medicaid office, with no income information. The website for the Centers for Medicare and Medicaid Services (CMS) is not designed for seniors or easy to use by the general public. It also failed to readily supply current income information. In fact, in order to prepare this statement, we relied on income information from other Medicare advocates, the Medicare Rights Center.

 Improved outreach is obviously needed and could be simply supplied starting with links to information about the program on the homepage of Medicare.gov. In addition, adequate funding must continue for seniors’ counseling provided by Area Agency on Aging offices; local organizations that already reach out to low income individuals; and state insurance (Medicaid) offices. In recent years, the need for these services has been rapidly growing, but funding has not kept pace.

LOW INCOME SUBSIDY (LIS) PROGRAM FOR PRESCRIPTION DRUGS

For persons enrolled in a Medicare Part D prescription drug plan, depending on income and asset levels, financial assistance, known as ‘Extra Help,’ is available. Enrolling in Extra Help, the federal government’s low income subsidy (LIS), is simpler than MSPs. For instance, applications can be submitted on-line, at the state Medicaid agency office, through a local Social Security Administration (SSA) office, or by deemed status (dual eligible). Persons enrolled in a MSP and who receive SSI, or “Dual Eligibles,” are automatically enrolled in a LIS. Of the 9 million seniors enrolled in a LIS, approximately 6 million were enlisted automatically, thus they were considered “dual eligibles.” Seniors not automatically enrolled into a LIS must meet the following criteria: annual income is below $15,315 ($1,276 per month) single or $20,535 ($1,711 per month) for a couple, with assets (bank accounts, stocks, bonds, etc.) of less than $11, 710 (single) or $23,410 (couple). Assets do not include house or car values.

According to a report by the Medicare Rights Center, the SSA found that 57% of seniors who applied for extra help were denied due to their financial assets, even though they met the income levels. Although the income and asset levels are more reasonable with LIS eligibility than with MSP, a senior should not be penalized because he or she has planned for the future and saved to help pay for unexpected expenses associated with older age. TSCL supports eliminating, or at the very least updating and indexing, asset tests, especially for MSP eligibility.

Similar to the MSP application, the LIS application is also complex and lengthy, which is discouraging to many seniors. Threats of imprisonment, questions surrounding the cash value of life insurance policies, in-kind support, and bank accounts are intimidating.  Some estimates suggest there are as many as 5 million seniors eligible for Extra Help who have not yet enrolled. TSCL believes this staggering number to be the result of long and confusing applications, asset testing, and a lack of awareness that Extra Help is even available. The SSA reports a person enrolled in Extra Help could save, on average, $3,700 annually. This is a huge amount for someone on a limited income.

SOLUTIONS

The first step in increasing enrollment numbers for both the MSP and the LIS is to make the information more readily available and increase outreach. By ensuring the funding for non-federal entities such as state Medicaid offices and local SSA offices, more seniors can be made aware of these programs. Additional federal grants are needed to ensure there are trained Medicare benefits counselors to help seniors apply for financial assistance.

TSCL believes that the asset test should be completely eliminated. Basing an individual’s eligibility on annual income is sufficient. Seniors should not be penalized for saving and planning for the future. However, if complete elimination of the asset test is not feasible, then, at the very least, increased asset test limits are necessary.

Another option could be to automatically enroll an MSP beneficiary into the LIS, and vice versa. With federal funding supporting both programs, the government should consider setting uniform standards (including simplified applications) for Medicaid offices to follow when determining the eligibility of seniors for the low income programs. This would help clear up confusion as to what resources are counted for which program and what resources do not need to be disclosed. With federal agencies working together with the same end result in mind, more eligible seniors would benefit.

In addition, the government already screens Medicare beneficiaries for “income related” Part B premiums. TSCL believes many more seniors would be enrolled in low income programs if Medicare beneficiaries were allowed to permit the Internal Revenue Service (IRS) to share low income information with both the SSA and CMS.

Several pieces of legislation are being, or already have been, introduced that offer possible solutions. For example, Rep. Lloyd Doggett (TX-25) introduced H.R. 1536, the Prescription Coverage Now Act, earlier this year. TSCL fully supports this legislation that increases asset test limits from $11,710 to $27,500 for individuals and from $23,410 to $55,000 for couples. Rep. Doggett’s bill also makes the application less intimidating by eliminating questions that ask for cash values of life insurance and in-kind assistance received.  Additionally, H.R. 1536 would authorize the Social Security Administration limited use of IRS data, which is already used to determine Part B eligibility. Finally, the bill also calls for coordination between low income programs in Part B and Part D. TSCL encourages Congress to approve this vital legislation.

TSCL applauds Congress for addressing the low enrollment numbers in Medicare assistance programs. With increased outreach, elimination of asset test limits, and a less intimidating application process, more individuals will be made aware of these programs designed to assist with rising healthcare costs. The end result will undoubtedly be increased enrollment and better financial stability for seniors in the lowest income brackets.

Thank you.