Eligibility Standards for Medicare/Medicaid Dual Eligibles: Issues and Options for Reform

Over 7 million low-income seniors or persons with disabilities are enrolled both in Medicare and Medicaid. Most of these dual-eligible beneficiaries receive the full range of Medicaid services, which are much more extensive than those provided by Medicare. But some are eligible only for the Medicare Savings Programs, under which Medicaid pays for Medicare premiums and cost sharing. Starting in 2006, both groups of dual eligibles also receive premium and cost-sharing assistance for Medicare’s prescription drug benefit.

This paper summarizes the rules under which Medicare beneficiaries may qualify for Medicaid, the Medicare Savings Programs, and the low-income drug subsidy. It then provides details on some key issues, including variation among states, cliff effects, and burdensome asset rules. It concludes with some illustrations of possible reform options and provides estimates of how many more beneficiaries might qualify for assistance under each option, as well as how current participants might be affected. The paper was prepared for the National Academy of Social Insurance’s study panel on Medicare/Medicaid dual eligibles.