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Understanding the Basics of Medicare Savings Programs

Understanding the Basics of Medicare
Savings Programs

Many people who are over age 65 and qualify for Medicare, are very happy to be able to have access to health insurance. However, while it is reassuring to know you have the ability to insure yourself, getting access to the Medicare health insurance plan does not come without a cost.

In order to receive the Medicare benefits that you qualify for, each person has to pay premiums, copayments, co-insurance, and deductibles for these benefits. And in some cases, these expenses can be difficult to manage and cover.


As we said, while you are automatically eligible for Medicare if you are a U.S. citizen that is 65 years old, these benefits are not free. You have to choose to enroll in the program and choose to pay the costs associated with the program.

The following are the costs associated with Medicare:

Cost of Medicare


Regardless of whether you choose to enroll in Original Medicare (Parts A & B) or a Medicare Advantage Plan (Part C), you will have to pay a premium.

[Remember that Original Medicare covers your hospital care and outpatient medical care and is administered by the federal government. A Medicare Advantage Plan covers the same things, your hospital care and outpatient medical care and usually also covers your prescription drug coverage, but it is administered by an insurance company contracted with the federal government. For more information on the difference between these two options, you can read this article. All the information provided here about Medicare Savings Programs applies to both Original Medicare and Medicare Advantage.]

Premiums are monthly payments that cover the cost of having healthcare insurance. These payments have to be made every month, regardless of whether or not you use any medical services. Everyone who enrolls in either Original Medicare (Part A and B) or Medicare Advantage (Part C) has to pay a premium.

The following chart will show you the costs of premiums of Part B in 2019:

If your yearly income in 2017 (for what you pay in 2019) was You pay each month (in 2019)
File individual tax return File joint tax return File married & separate tax return
$85,000 or less $170,000 or less $85,000 or less $135.50
above $85,000 up to $107,000 above $170,000 up to $214,000 Not applicable $189.60
above $107,000 up to $133,500 above $214,000 up to $267,000 Not applicable $270.90
above $133,500 up to $160,000 above $267,000 up to $320,000 Not applicable $352.20
above $160,000 and less than $500,000 above $320,000 and less than $750,000 above $85,000 and less than $415,000 $433.40
$500,000 or above $750,000 and above $415,000 and above $460.50

Premiums for Medicare Advantage plans will vary from plan to plan depending on the policy you choose and the insurance company that is running the plan. Because of these differences between carriers and policies, we cannot give you the exact amount of your expected premium, but the following may be helpful to know as you estimate your costs:

  • In 2019, the average monthly Medicare Advantage premium is $28
  • Premiums can range anywhere from $0 to over $200.


The next cost associated with Medicare is copayments. A Copayment is the share of the medical bill that you have to pay for to use the medical service. Copayments are usually a set amount that varies depending on what service you need, and they are paid after you pay your premiums and your deductible.

Most Medicare Advantage plans require a copayment when you have a medical visit or service.

The amount of the copayment will vary depending on the Medicare Advantage plan you choose and what medical procedure or care was performed.


Co-Insurance is also the share of the medical bill that you will pay when you use a medical service, but instead of being a set amount like a copay, it is usually a percentage of the service.

Co-Insurance is usually associated with the costs of enrolling in Original Medicare and is usually 20% of the cost of the medical service. Meaning, that after you pay your premium and your deductible for Original Medicare, Medicare will pay 80% of the costs of your medical care and you will be responsible for 20%.


A deductible is a set amount of money that you have to pay out of pocket each year before Medicare will begin to pay for your medical care. Your deductible must always be paid before your insurance benefits begin to cover your medical care. Deductibles must be paid every calendar year.

The deductible for Original Medicare (Part B) in 2019 is $185. After this is paid you would be responsible for 20% of your medical bills.

The deductibles for Medicare Advantage plans (Part C) will vary from plan to plan.


It may also be helpful to know that all Medicare Advantage plans have an out-of-pocket maximum of at most $6,700 for all covered medical services and treatment, but this maximum does not include the out-of-pocket costs for prescription drugs.

Remember also that Original Medicare does not include prescription drug coverage and so if you get a Part D prescription drug plan in addition to Original Medicare, you will have additional premiums, deductibles, and co-pays associated with this plan as well. It is also good to know that Original Medicare does not have an out-of-pocket maximum, which means there are no limits to the amount you pay for medical services under this plan.


Now that you have an idea of the costs that are associated with enrolling in Medicare, you can see that it can really start to add up by the time you pay for your premium, your deductible, your copayments and co-insurance. This is where Medicare Savings Programs can play a role in making sure you get the healthcare insurance coverage you need.

Pay For Medicare Coverage

Depending on how much money you make and how much savings or other assets you have, Medicare Savings programs can assist you in paying for Medicare.

The good news is that regardless of whether you choose to enroll in Original Medicare or Medicare Advantage, you may qualify for help paying for Medicare. There are actually two main types of help: Medicare Savings Programs (MSPs) and the Low Income Subsidy (LIS) for prescription drug coverage. We will describe and explain these programs in detail.


First let’s talk about Medicare Savings Programs.

A Medicare Savings Program (MSP) can help you pay Medicare premiums, deductibles, co-insurance and copayments if your countable income is 135% of the Federal Poverty Guidelines (FPG) or less. This amounts to countable income of $1,405 per month or less if you live alone and $1,902 for couples.

Medicare Savings Programs

In order to qualify for an MSP, you must be enrolled in Medicare and also meet the income and asset guidelines. It’s important to know that these guidelines regarding your assets and your income vary from state to state and some states do not count assets when determining your MSP eligibility. Arizona is one of the states that does not count assets. We will talk more about the specifics of these guidelines in a moment.

There are three main Medicare Savings Programs and they each help in different ways depending on your income. Obviously, the less income you have, the more help these plans provide.


The Qualified Medicare Beneficiary (QMB) program helps people with countable income that’s 100% of Federal Poverty Guidelines, which is $1,041 per month or less if you live alone.

  • If you have Original Medicare, QMB helps pay for your Part A and Part B premiums, deductible, and coinsurance.
  • Instead, if you have a Medicare Advantage plan, QMB will help pay your premium, copayments, and deductible.


The Specified Low-Income Beneficiary (SLMB) program is designed to help people with countable income that’s more than 100% of FPG, but at or below 120% of FPG. This means that your income would be between $1,041 and $1,249 per month if you are living alone.

The ways SLMB offsets costs are slightly different than the QMB program.

  • If you have Original Medicare, SLMB helps pay for your Part B premium.
  • If you have a Medicare Advantage plan, SLMB will also help with your monthly premium.


Finally, the Qualified Individual-1 (QI-1) program helps people with countable income that’s more than 120% of FPG, but at or below 135% of FPG. This program helps people whose countable income is higher than $1,249 but less than $1,405 per month if they live alone.

Like SLMB programs, QI-1 programs help cover your premiums.

  • If you have Original Medicare, QI-1 helps pay for your Part B monthly premium.
  • If you have a Medicare Advantage plan, QI-1 also helps with the monthly premium.


If you enroll in a Medicare Savings Program, you will also automatically get access to LIS or Extra Help, which is the federal program that helps pay for your Medicare prescription drug plan costs, also known as Part D.

The Low Income Subsidy (LIS) will help cover copayments and deductibles association with your prescription costs if your countable income is less than $18,735 per year if you live alone and $25,365 a year for couples.


As you know, to qualify for a Medicare Savings Plan you have to meet certain guidelines for income and assets. For your information, examples of income include any wages and Social Security benefits you receive.

Some states also have asset limits in order to enroll in an MSP. Examples of assets include checking accounts and stocks, savings accounts, bonds, mutual funds, retirement accounts, and real estate.

Guidelines for Income and Assets

However, no matter what state you live in, there are certain things that can never be counted as assets. These include the following:


Your primary


Burial spaces


One car

burial funds

Burial funds up to
$1,500 per person

wedding rings

Household goods
and wedding/
engagement rings

life insurance

Life insurance with
a cash value of less
than $1,500

As we said before, Arizona does not have any asset limits in order to be eligible for an MSP. It is also recommended that if your income or assets seem to be above the MSP guidelines, you should still apply if you need the help.

One reason to do this is because MSPs and the LIS only look at your countable income, which actually may be significantly lower than you realize. For instance, the programs count less than half of your earned income.


Because the guidelines and requirements for the Medicare Savings Program (MSP) vary from state to state, we recommend calling your local Medicaid office for application steps and state-specific guidelines.

You will have to provide documentation to show your eligibility. These will likely include:

Medicare Savings Program
  • Your Social Security card
  • Your Medicare card
  • Your birth certificate, passport, or green card
  • Proof of your address (e.g., electric or phone bill)
  • Proof of your income (e.g., Social Security Administration award letter, income tax return, pay stub)
  • And in some cases, information about your assets (e.g., bank statements, stock certificates, life insurance policies)

It is important to know that if you are approved for an MSP, you will have to renew your MSP every year.


Even if you don’t qualify for a Medicare Savings Program or the LIS, you may still want to reduce the out-of-pocket costs of Medicare and give yourself more room in your budget for other priorities.

Here are a few great options for reducing your costs and paying less for your Medicare benefits:

Reduce Costs of Medicare
1 Even if you opt to enroll in Original Medicare, where you don’t any flexibility in the amount of you have to pay in premiums, deductible, and co-insurance, if you have a separate Part D prescription drug plan, you may be able to find a different Part D plan that costs less. Talk to your insurance agent about the exact things that you need and the exact medications that you are taking so that you can find a plan that better suits your needs while still being mindful of your budget concerns.
2 Additionally, if you have a MediGap plan to cover some of the expenses of Original Medicare, you can shop around to find a more affordable MediGap plan or change your options or coverage to reduce your premium.
3 If you opt for a Medicare Advantage plan instead of Original Medicare, you have even more options to reduce your costs.

First of all, because Medicare Advantage plans have restrictions on where you can go for care based on where you live, they are able to offer plans at much lower premiums than Original Medicare.

Also, most Medicare Advantage plans include a prescription drug plan and so you often don’t have pay an extra premium for prescription drug coverage.

Finally, because there are so many more options of plan types and carriers that offer Medicare Advantage plans, you have much more flexibility in the cost of your plan. There are lots of opportunities to find more affordable plans and still get the coverage you need.


No matter what your budget or your healthcare needs, finding an experienced, knowledgeable Medicare insurance agent to help you navigate all your Medicare choices and options, can pay off in a big way. The right agent will know the best ways to serve you, every option that is available to you, and how to make the program fit you and your particular health and budgetary needs.

Medicare Insurance Agent

At Insurance Professionals of Arizona, we care about our clients. We want them to have access to Medicare coverage so they don’t get stuck with huge medical bills, but we also know that they shouldn’t have to pay more than they need to for that protection.

We know there is a lot to think about and sometimes it feels complicated and overwhelming. We are willing to walk you through everything you need to know to make an informed decision and weigh your options so that your choice fits in with your lifestyle and budget concerns. We are experts at Medicare so you don’t have to be!

We’re here to help! Call us today.

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