What Is a Medicare Savings Program? Here Are 5 Things to Know About MSPs

Even with Medicare coverage, the program’s out-of-pocket costs can be expensive, especially if you’re on a fixed income. But financial help is available.

If your income and other resources fall within government guidelines, you may qualify for a Medicare Savings Program (MSP) to help pay your share of expenses. That can include all or part of Part A and Part B premiums, deductibles, copayments, and coinsurance amounts. With 3 of the 4 types of MSPs, you also automatically qualify for help in paying Part D prescription drug costs.

Below, we break down five things you should know about MSPs.

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1. The federal government sets baseline rules for Medicare Savings Programs

There are four MSPs that are funded by the federal government and run by the state where you live. In determining your eligibility, MSPs consider your income and — in most states — your assets, including savings and investments. How much help you get depends mostly on how your income compares to the federal poverty level (FPL), a benchmark used to determine benefits. But since the states administer MSPs, the exact rules differ based on where you live.

If you are already enrolled in Medicaid when you become eligible for Medicare, administrators in your state may also enroll you in an MSP. If you become eligible for Medicare but you aren’t already enrolled in Medicaid, you’ll have to apply for an MSP.

2. There are 4 types of Medicare Savings Programs

There are three main types of MSPs and one extra specific program. Below are the programs, eligibility guidelines, and what each covers. If you qualify, your state matches you with the program that best fits your situation. 

Medicare Savings Programs: Monthly income limits (2022 federal baseline)

Here is a breakdown from the Kaiser Family Foundation (KKF) with more detail on each state’s MSPs.

3. Eligibility for MSPs varies by state

To qualify for an MSP, you have to be eligible for Medicare. That means you have to be either at least age 65 or have a permanent disability. Then, you also have to be below your state’s limits for income and assets.

Overall, 10.3 million Medicare beneficiaries were enrolled in an MSP in 2019, according to a recent KFF study. That’s about 16% of people with Medicare. The same study found that, not surprisingly, Medicare enrollees who live in states that have expanded eligibility requirements beyond the federal minimum typically have higher percentages of enrollees in MSPs compared with states that have less generous standards.

4. Not all states have asset tests

Income limits vary greatly by state, as do the amount and types of assets that are included in the limits. The federal resource limits for the 3 main MSPs in 2022 are $8,400 for individuals and $12,600 for married couples.

The following 10 states and the District of Columbia have eliminated the asset test:

• Alabama

• Arizona

• Connecticut

• Delaware

• District of Columbia

• Louisiana

• Mississippi

• New Mexico

• New York

• Oregon

• Vermont

The three states that have asset levels higher than the federal limit:

• Maine

• Massachusetts

• Minnesota

If you need help deciding whether you are eligible for an MSP, Social Security offers a Benefit Eligibility Screening Tool.

Be sure to tell the truth when you apply for a MSP. You will be asked to sign a form certifying that you’ll report any change in your income or financial circumstances to the state Medicaid agency, says Brandy Bauer, director of Medicare Improvements for Patients and Providers Act (MIPPA) program for the National Council on Aging, in an email to GoodRx Health. 

If you don’t report an income change, and the state later finds out about a sudden windfall or change in income — usually when you renew or must recertify to keep the benefit — you’re likely to face double consequences. Not only will you be kicked out of the program, but you also may have to pay back payments you received since your situation changed.

5. MSPs cover a range of Medicare expenses, from monthly premiums to out-of-pocket drug costs

Most MSPs will cover the Medicare Part B premium. In 2022, the standard Part B premium is $170.10 a month, or $2,041.20 a year. The Qualifying Individual (QI) and Specified Low-Income Medicare Beneficiary (SLMB) programs may offer up to 3 months of retroactive reimbursement for Part B premiums as well.

If you face a Part B late-enrollment penalty, it will be waived when you join an MSP.

The most comprehensive MSP is the Qualified Medicare Beneficiary (QMB) Program. It covers Part A and Part B premiums as well as deductibles and coinsurance.

• If enrolled in the QMB program and you get a bill for Medicare-covered services, there’s likely been a mistake, advises the Medicare Rights Center.

• You can try to work it out with your provider or the debt collector. You can show your Medicare, Medicaid, or QMB card, or a copy of your Medicare summary notice if you have traditional Medicare, to prove you’re in the QMB program.

• If the problem continues, call 1-800-MEDICARE (1-800-633-4227 or 1-877-486-2048 for TTY users) or contact your Medicare Advantage plan.

Once in an MSP (except for the Qualified Disabled and Working Individuals Program), you should be automatically enrolled in Extra Help. It’s a program that helps pay your Medicare Part D prescription drug costs. The Social Security Administration estimates Extra Help is worth up to $5,100 a year, because it helps cover Part D premiums and annual deductible. It also limits 2022 medication costs to $9.85 per drug. If you take a generic, then the limit is $3.95. If you live in a long-term care facility or get home- and community-based services, you won’t pay anything for covered drugs.

What expenses aren’t covered by MSPs?

Different MSPs cover different kinds of out-of-pocket costs. Be sure to understand the details. Also, MSPs typically don’t pay your health costs first if you have another form of insurance. 

Here is a list of situations when Medicare doesn’t have primary responsibility to pay and usually won’t. Common situations include:

• You are covered by a large group health insurance plan where you or your spouse works or used to work.

• You were in an accident, and you or the other person involved has health insurance that is required to pay.

• You are covered by workers’ compensation insurance.

• You’re enrolled in Veterans Health Care and get care at a VA site.

What other programs and resources can help lower Medicare costs?

• If you or a spouse were in the U.S. military, you may be eligible for Veterans Health Care at little or no cost. Having both original Medicare and these benefits can provide you with terrific care.

• The VA Aid and Attendance benefit and Housebound allowance may be a good answer for long-term care. A veteran can’t get both benefits at the same time, though. You can contact the VA at 800-827-1000 for more information.

• If you worked for an employer that offered retiree healthcare benefits, you may still be entitled to them even if you haven’t worked for the company recently. The Medicare website offers some information about how Medicare works with retiree healthcare.

• The National Council on Aging’s Benefits CheckUp can help you find assistance with dental, hearing, and vision care, among other services.

How do you sign up?

Because each state runs its own MSPs, you can go to your state Medicaid office or contact your local State Health Insurance Assistance Program (SHIP) for free one-on-one help in applying for a Medicare Savings Program.

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Written by:

Jennie L. Phipps

Jennie L. Phipps is a journalist with decades of experience, including 10 years as the top editor of midsize daily newspapers. For the last 10 years, she has written about retirement, Medicare, Social Security, annuities, insurance, real estate, budgeting and saving, and all things personal finance for a variety of companies and websites.

Edited by:

Kristen Gerencher, MSOT

Kristen Gerencher is an award-winning writer who has reported on healthcare, medicine, and insurance for a variety of national publications. Before contributing to GoodRx, she was a healthcare and personal finance reporter for MarketWatch.

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Co-contributor: Carrie Weiner Campbell