Analysis of Alternative Approaches to Increasing Financial Assistance to Medicare Beneficiaries with Low Incomes

Alternative approaches to providing financial aid for beneficiaries with low-incomes are not overly expensive and fill gaps in the current Part B program.

The Issue

Medicare beneficiaries with low incomes are often burdened by Part B premiums and hard-to-access Medicare Savings Programs (MSPs).

Key Findings

• Current subsidies do not help all low-income enrollees and phase out at relatively low incomes.
• Capping Medicare premiums at 8.5 percent of income would assist virtually all individuals with incomes at or below 100 percent of the federal policy level (FPL) and most individuals with incomes between 100 and 200 percent of FPL and add $5.8 billion dollars to Medicare spending.
• 6.1 million additional people would receive subsidies under the 8.5 percent cap.
• Under a policy using the Inflation Reduction Act premium tax credit schedule, all beneficiaries with incomes below 200 percent of FPL would receive at least some assistance. This policy would add $36.8 billion to Medicare spending.

• Eliminating cost sharing for those with incomes at or below 100 percent of FPL would add $13 billion to Medicare expenditures and greatly increase affordability for people living in poverty.

Conclusion

Researchers determine there are several viable options for enhancing financial assistance for lower-income enrollees beyond what Medicare Savings Programs can provide. Researchers suggest these alternatives would correct significant flaws in the current Part B program at a relatively low additional cost to the federal government.

About the Author

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.