Medicare and spenddown

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 the Application for Medicare chapter for more information about this requirement.

Allowable expenses for the Medically Needy program must not be reimbursable by Medicare or other third-party coverage. Expenses must be the responsibility of the applicant/recipient. The amount left over after Medicare or other insurance pays is usually patient responsibility and usable against the spenddown liability. For more information about Medicare program coverage and allowable medical expenses please see the Allowable medical expenses chapter.

Individuals applying for medical benefits should be considered for all programs and if the individual is Medicare eligible the Medicare Savings Programs need to be considered. An individual can receive any of the MSPs while pending a spenddown. When an individual meets their spenddown amount the Medicaid case can open and be open concurrently to the QMB and SLMB programs. It is only QI-1 that cannot be open with an MSP. ACES will require the QI-1 case be closed and guide the user through the process.

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. QDWI has other eligibility criteria primarily that the individual has lost free Part A due to no-longer being considered disabled.

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.

QMB recipients cannot be charged the customary 20% after Medicare. Balance billing of QMB recipients is not permitted by CMS.

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

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 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.