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Medicare and Medicaid together play a role in providing access to necessary health services for the 10.4 million low-income seniors and people with disabilities who, in 2012, were dually eligible for both programs. For these individuals, Medicare is the primary payer for services such as physician visits, hospital stays, post-acute skilled care, and prescription drugs. State Medicaid programs wrap around Medicare’s coverage by providing financial assistance for Part A and B services in the form of payment of Medicare premiums and cost sharing (including deductibles and coinsurance), as well as additional benefits not covered by Medicare, such as long-term services and supports. Dually eligible beneficiaries are among the poorest and sickest individuals covered by either Medicare or Medicaid, and rely on this joint coverage to meet their health care needs.

Medicaid payment for Medicare cost sharing

Almost 20 percent of all Medicare beneficiaries are dually eligible and receive Medicare premiums or cost-sharing assistance through the four separate Medicare Savings Programs or through non-MSP eligibility for full Medicaid benefits (MedPAC and MACPAC 2017). The MSPs are those for:

  • qualified Medicare beneficiaries (QMBs);
  • specified low-income Medicare beneficiaries (SLMBs);
  • the qualifying individuals (QIs); and
  • qualifying disabled and working individuals (QDWIs).

For more information on the eligibility criteria for the MSPs and the benefits they offer to enrolled beneficiaries, see MACPAC’s March 2015 chapter on Medicaid coverage of premiums and cost sharing for low-income Medicare beneficiaries.

States also pay for Medicare cost sharing outside of the MSPs. In 2012, 1.9 million Medicare beneficiaries received full Medicaid benefits, but had incomes too high to qualify for premium and cost-sharing assistance through a MSP. These dually eligible beneficiaries qualify for Medicaid through pathways that include the medically needy option, the special income level option for institutionalized individuals, and home and community-based services (HCBS) waivers.