December 29, 2021
3 min read
Increasing asset limits placed on low-income Medicare beneficiaries seeking Medicaid supplemental coverage, which in many states have remained unchanged for 30 years, could increase eligibility by as much as 7.5%, according to researchers.
Going further, replacing the asset test with a “high wealth category test,” and thus allowing all low-income Medicare beneficiaries who lack investments, secondary residences or businesses to qualify, would increase Medicaid eligibility among this population by 20.5%, they added. The researchers — from the University of Pittsburgh, Tufts University and the College of William & Mary — published these and other recommendations in Health Affairs.
“Medicaid supplemental coverage is vital for many low-income seniors because the out-of-pocket costs for Medicare can be high, and seniors may have to choose whether to spend their limited income on medical care or other essential expenses,” Noelle Cornelio, a doctoral student at the University of Pittsburgh Graduate School of Public Health, and lead author of the paper, told Healio Rheumatology. “Medicaid asset limits for the low-income senior population are low and have not been updated since 1989 making eligibility requirements more restrictive over time since inflation keeps increasing.”
According to Cornelio and colleagues, approximately 8.7 million low-income elderly or disabled Medicare beneficiaries are also enrolled in full-benefit Medicaid. This supplemental Medicaid coverage is used to pay for Medicare premiums, co-pays and other services, including vision and dental care.
However, to receive Medicaid coverage, Medicare recipients must first undergo an asset test, which restricts eligibility by placing a limit on the value of assets held by the beneficiary. In most states, that limit was set in 1989 at $2,000 for an individual and $3,000 for a couple, and has remained unchanged ever since, according to the researchers.
Adjusted for inflation, that $2,000 in 1989 is now worth less than $900.
To examine how an alternative asset test could impact Medicaid eligibility for low-income Medicare beneficiaries, Sabik and colleagues studied income and asset tests in all U.S. states during the period from 2006 to 2018. The team interviewed state Medicaid administrators and built a database compiling each state’s rules. In addition, they analyzed similar programs, recent policy proposals and possible solutions to improve the current system.
Based on their research, the authors proposed four potential solutions:
- Update the asset test based on rates of inflation since their implementation in 1989, which would increase full-benefit Medicaid eligibility among Medicare beneficiaries by 1.7%.
- Match the Medicaid asset test to that of other federal programs with similar tests, which correspond to about $7,280 for individuals and $10,930 for couples. This would increase eligibility by 4.4% and target people who are more likely to be non-white and report having poorer health, according to the researchers.
- Increase the asset limit to $10,000 for individuals and $20,000 for couples, as proposed in the Supplemental Security Income Restoration Act of 2019. This would increase eligibility by 7.5% and again cover people who are more likely to be non-white and report having poorer health.
- Replace the asset test with a “high wealth category test,” allowing all low-income Medicare enrollees who do not own investments, secondary residences or businesses to qualify. This would increase eligibility by more than 20.5%, to a population that is demographically similar to their low-income peers who would not meet a high wealth test for their assets.
According to the researchers, states could also consider forgoing any asset test altogether. This policy, currently in practice in Arizona and in the process of being adopted in California, would increase full Medicaid eligibility by nearly 31%, they said.
“The goal of asset limits is to limit Medicaid benefits to a low resource population,” Cornelio said. “However, most low-income seniors have few, if any, assets. While 60% of seniors that meet both the Medicaid income and asset limit have no assets, 50% of seniors who met the income limit, but did not meet the asset limit, had assets below $50,000. Incrementally increasing the Medicaid asset limits might not greatly increase the number of newly eligible Medicaid beneficiaries, but would target specific populations, including minority populations and those in poor health.”
“We found that seniors in poor health are more likely to benefit from modest increases in Medicaid asset limits,” she added. “This finding is significant since increasing the Medicaid asset limit will benefit low-income seniors who often forgo needed care, which could ultimately lead to serious health issues and more costly care.”