A senior who has worked 40 quarters (10 years) in Medicare-taxed employment may get their hospital insurance (Part A) premiums for free but they will pay at least $170 per month for medical insurance (Part B) premiums in 2022. That is the case if they are in the lowest income bracket, earning less than $91,000 per year as an individual or less than $182,000 as a couple. Those in the highest tax bracket will pay as much as $578 per month.
Keep in mind that this does not include the cost of deductibles, copayments, coinsurance, prescription drug (Part D) coverage, or actual care.
Those costs come into perspective when you realize that the maximum amount someone will receive in Social Security benefits in 2022 is $3,345 per month. That assumes they retired at full retirement age. Assuming no other assets or financial resources, Medicare would cost them as much as 5% to 17% of their Social Security income.
That does not leave much room for other expenses such as food, housing, utilities, and other basic needs.
Types of Medicare Savings Programs
Thank goodness there are Medicare Savings Programs available to soften the blow. These programs do not pay directly for your health care. What they do is pay down the costs that Medicare leaves on the table, costs like premiums, deductibles, coinsurance, and copayments. Here is a breakdown of what each program covers.
QDWI is unique in that it is intended for people who had Medicare based on a disability but who were no longer eligible for premium-free Part A when they went back to work. To be eligible for the program, they must be under 65 years old with a disability, their earnings exceed Substantial Gainful Activity limits, and they are not eligible for Medicaid.
Income Limits to Qualify
Each of the four Medicare Savings Programs has different financial eligibility requirements. When it comes to income, the federal poverty limit (FPL) is used to determine eligibility in a number of government programs.
Each year the U.S. Census Bureau updates the poverty thresholds across the 48 contiguous states, the District of Columbia, Alaska, and Hawaii. The FPL is then calculated using the poverty threshold and the Consumer Price Index.
These are the current income eligibility limits for 2022.
Asset Limits to Qualify
Certain assets may be counted when it comes to eligibility for Medicare Savings Programs. Liquid assets, i.e. things that can be sold for cash, may make it harder to qualify. This may include cash, bank accounts, stocks, bonds, real estate, and motor vehicles.
The federal guidelines, however, exclude the following from consideration:
Your primary residenceYour primary carBurial funds up to $1,500 per personBurial plotsFurniture and other household itemsLife insurance with a cash value of less than $1,500Wedding/engagement rings
These are not considered to be countable assets.
Most states follow the recommended federal asset limits, but some states — Alabama, Arizona, Connecticut, Delaware, District of Columbia, Mississippi, New York, Oregon, and Vermont — have chosen to set no limit.
How to Apply
If you meet the criteria for any of the four programs listed above, take action. Reach out to your state Medicaid office or call 1-800-MEDICARE (1-800-633-4227; TTY 1-877-486-2048) to apply. You can also download an application online.
Enrolling in a Medicare Savings Program automatically signs you up for Medicare Part B, if you had not done so already. This can be a convenient way to avoid paying Part B late penalties. Enrolling in Part B after your Initial Enrollment Period or Special Enrollment Period based on employment would land you with lifelong Part B penalties. Signing up for a Medicare Savings Program eliminates any penalties you would have paid on your Part B premiums.
A Word From Verywell
If you are finding it hard to pay off your Medicare bills, know that help is available. You may be eligible for one or more of four Medicare Savings Programs—Qualified Disabled & Working Individuals (QDWI), Qualifying Individual (QI), Qualified Medicare Beneficiary (QMB), or Specified Low-Income Medicare Beneficiary (SLMB). Look into your assets and income to see if you qualify for assistance through your state Medicaid program.
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