Medicare and Spenddown
Purpose: This section provides information about what the department allows as medical expenses for individuals who have spenddown, are entitled to Medicare and who may qualify for a Medicare Savings Program (MSP).
To qualify for Medicaid, individuals who are entitled to Medicare must apply for and enroll in Medicare. See WAC 182-503-0505 for more information about this requirement. For detailed information on the health insurance coverage plans Medicare offers, see Medicare and spenddown.
In summary, the Medicare Savings Program has four levels of coverage, based on income, with the lowest income standard to qualify for QMB and the highest income standard to qualify for QDWI. MN resource standards also apply.
Qualified Medicare Beneficiary (QMB)
- Pays Part A and Part B premiums
- Pays deductibles
- Pays copayments except for prescriptions
Specified Low-Income Medicare Beneficiary (SLMB)
- Pays Part B premiums
Qualified Individual (QI-1)
- Pays Part B premiums
Qualified Disabled Working Individual (QDWI)
- Pays Part A premiums
Qualified Medicare Beneficiaries (QMB)
The QMB program is the only MSP that pays:
- Medicare Part A and Part B premiums; and
- Medicare Part A, Part B, and Part C coinsurance charges, deductibles, and copayments.
QMB does not pay for Part C or Part D premiums or for Part D prescription drug copayments. Very few medical expenses can be used to meet a spenddown liability when individuals have both QMB and Medicare because between these two programs they are already fully covered.
Example: Joe brings you a current Explanation of Benefits (EOB) statement showing a recent 10-day hospital stay ($15,000) and what Medicare paid on the bill.
Medicare assigned $1,068 to Joe's Medicare deductible and charged him an additional $2670 for coinsurance.
Medicare paid $6,800 to the hospital. The hospital did an insurance adjustment for the remaining balance.
- If Joe is eligible for QMB coverage, his charges of $1,068 and $2,670 will be paid by the QMB program and can't be used towards his spenddown liability.
- If Joe isn't eligible for QMB coverage, these charges could be used towards meeting his spenddown liability.
Medicare premiums may only be allowed as an expense towards meeting spenddown when HCA (through the MSP programs, for Part A and Part B) or the federal government (through the Part D low-income subsidy) is not paying them. Allowable Medicare premiums are coded in ACES as a spenddown expense and aren't used as an income deduction on the MEDX screen. Enter the expense based on the date it is incurred by the individual.
Medicare Part A
HCA pays Part A premiums when the individual is eligible for the QMB (S03) program or the Qualified Disabled Working Individual (QDWI) (S04) program in ACES. HCA allows Part A premium expenses for spenddown only if:
- The individual incurred the expense in the month of application and is not eligible for QMB until the first of the following month; or
- The individual is eligible under an MSP that does not pay for Part A costs; or
- The individual incurred the expenses in the three months prior to the application month and was not a QMB or QDWI recipient at that time.
Medicare Part B
HCA pays Part B premiums under the QMB (S03) program and Specified Low-Income Medicare Beneficiary (SLMB) (S05) program until the certification period ends. HCA does not allow Part B premiums as a spenddown medical expense for individuals who receive coverage under these programs.
HCA pays Part B premiums under the Qualified Individual (QI)-1 (S06) program (formerly known as the Expanded Specified Low-Income Medicare Beneficiary (ESLMB) program) as long as the individual is not eligible for CN or MN coverage and pays under the State Medicare Buy-In program when they are otherwise eligible for CN or MN coverage.
Note: When a QI-1 individual becomes MN or CN eligible, the QI-1 closes. If MN or CN coverage ends, the individual remains eligible for the rest of their original QI-1 certification. Be sure to reopen the S06 AU at the time you initiate the review on an MN program.
Medicare Part C
Part C premiums are paid by the individual; HCA no longer pays them. Part C is an option for Medicare individuals who choose to receive Medicare services through a Managed Care plan instead of through the original Medicare fee-for-service program. Part C coverage is also known as Medicare Advantage.
Some Part C plans also include a prescription drug benefit as part of their Part C coverage. An individual who receives prescription drug coverage under Part C doesn't have to enroll in a separate Part D plan. Since Part C premiums can't be paid by the department, do not refer Part C individuals to the Premium Payment program for assistance.
Part C premiums are an allowable medical expense for spenddown. Enter the expense into ACES as the expense is incurred. Part C premiums are not allowed as an income deduction so do not code Part C premiums as a medical deduction on the MEDX screen.
Medicare Part D
The department doesn't pay for Part D premiums. Individuals with income below certain standards may apply to the federal government for help paying Part D premiums. This is called the Low-Income Subsidy (LIS) program. Once the government determines individuals are eligible for the LIS, they remain eligible until the end of the calendar year.
Each year in January, individuals need to reapply for the LIS unless they are Medicaid individuals. Medicaid individuals are automatically "deemed" eligible for the LIS and remain eligible until the end of the calendar year in which they lose their Medicaid eligibility.
All States have a range of "benchmark" Part D plans. Benchmark plans are considered average Medicare plans. They have adequate health care coverage and their premiums can be fully covered by the LIS. Other Part D plans have higher premiums than the benchmark plans. The premiums for these plans are higher than what the LIS covers. In these plans, the LIS pays a portion of the premium (up to the benchmark amount) and the individual pays the amount above the LIS limit if they want to remain with a specific Part D plan.
HCA does not allow Part D premiums as an allowable expense for spenddown unless they were:
- Incurred prior to a period of eligibility for the LIS; or
- The individual is paying the portion above the subsidy amount, in which case HCA allows only the amount the individual is actually paying.
When are a Medicare individual's prescription drug costs allowed for spenddown?
For the purposes of Medicaid spenddown, incurred Part D prescription costs are treated just like any other costs incurred for medical care. Apply all the usual rules for determining an individual's liability, insurance coverage and spenddown eligibility. Costs paid in whole or in part by a public program may be counted as incurred medical expenses to establish eligibility under a Medicaid spenddown.
Part D enrollment is voluntary, so not all Medicare individuals will be enrolled in a Medicare Part D plan (PDP) or a Medicare Part C Advantage Plan (MA-PD) when HCA first receives a medical application.
However, under WAC 182-503-0505, Part D enrollment is a condition of eligibility for Medicaid coverage. HCA notifies the federal government (CMS) when an individual becomes eligible for MN coverage. The individual is then automatically eligible for the LIS and enrolled in a Part D plan.
Note: Even if an individual is only eligible for MN coverage in one three-month base period a year, that certification provides extra help (through LIS) paying Part D premiums for the rest of that calendar year.
Enrollment in a PDP or MA-PD doesn't ensure that all drugs are covered. Each plan has a different combination of covered drugs, deductibles, copays and coverage gaps.
- Always open QMB coverage whenever an individual is eligible, because HCA gets federal reimbursement for part of what it pays out for QMB individuals.
- Carefully review medical expense for a QMB eligible individual before using any portion of the expense towards meeting spenddown liability.
- To determine if drug costs incurred by Medicare individuals are allowable for spenddown, apply the following rules:
- If the individual was not enrolled in a PDP or MA-PD on the date of service, allow the prescription drug cost. The reason the individual wasn't enrolled when the expense was incurred doesn't matter.
- If the individual was enrolled in a Part D plan on the date of service and chose to self-pay for a covered prescription to try and meet spenddown liability, the expense can't be allowed because the drug was covered under their Part D plan.
- If the individual was enrolled in a PDP or MA-PD on the date of service, the plan must issue a periodic (at least monthly) statement to the individual explaining all benefits paid and denied, and amounts attributed to cost-sharing. If the drug charge is identified on the statement as an individual's liability; such as part of a deductible, copay or coverage gap, allow the expense.
- When a plan denies coverage of a prescription, the individual has the right to request an exception for coverage of the drug. The individual receives a written decision on any exception requested. If the drug charge appears on the statement as a denial, and no exception was requested, do not allow the charge.
- If the drug charge appears on the statement as a denial, and an exception was requested and denied by the plan, allow the charge.
- Important: Ask for, and review the monthly plan statements for questionable expenses before allowing the expenses towards meeting spenddown liability.