Medicare Savings Programs

Medicare Savings Programs pay some or all of a beneficiary’s Medicare premiums and cost-sharing. Enrollment in an MSP automatically qualifies the beneficiary for the Part D Low Income Subsidy. Together, the Medicare Rights Center estimates that MSP and LIS enrollment saves each individual at least $8,400 annually in out-of-pocket health care costs. Enrollment has never exceeded 60 percent of the eligible population. Millions of Medicare beneficiaries who qualify for these programs do not receive them, and the legislation that was designed to fix the enrollment problem has been frozen for a decade.

The MSP Architecture

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Four programs comprise the MSP framework, each serving a different income band and covering a different slice of Medicare cost-sharing.

The Qualified Medicare Beneficiary program is the most comprehensive. QMB pays the Part A premium, the Part B premium, and all Medicare deductibles, coinsurance, and copayments. Eligibility requires income at or below 100 percent of the federal poverty level and assets below $9,660 for an individual or $14,470 for a couple in 2025. Providers who accept Medicare assignment are prohibited from billing QMB beneficiaries for Medicare cost-sharing, a protection many providers either do not know about or do not observe.

The Specified Low-Income Medicare Beneficiary program covers the Part B premium only. Eligibility requires income between 100 and 120 percent of FPL with the same asset limits as QMB. The Qualifying Individual program also covers the Part B premium, for beneficiaries with income between 120 and 135 percent of FPL. The Qualified Disabled and Working Individual program pays the Part A premium for certain disabled workers who lost premium-free Part A eligibility when they returned to work.

The LIS intersection is where MSPs gain their greatest financial leverage. MSP enrollment triggers automatic qualification for full LIS benefits under Part D, which covers prescription drug premiums, deductibles, and the majority of copayments. A beneficiary who enrolls in QMB receives not just premium and cost-sharing relief on Parts A and B but also full Part D drug coverage with minimal copayments. A beneficiary who is eligible for QMB but not enrolled pays all of those costs out of pocket. The gap between enrolled and not enrolled is not marginal. It is the difference between accessible health care and a benefit structure that prices out the population it was designed to serve.

State variation adds another layer. Fifteen states plus the District of Columbia have eliminated MSP asset tests entirely, removing the most common barrier for beneficiaries whose income qualifies but whose modest savings disqualify them. Six states set MSP income limits above the federal minimum. Connecticut, the District of Columbia, Indiana, Maine, Massachusetts, and New York offer the most generous MSP eligibility in the country. In states that maintain both asset tests and federal-minimum income limits, the MSP enrollment gap is widest.

The Enrollment Gap

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MACPAC’s analysis found that historically, MSP participation rates have remained below the eligible population, with significant variation by program and by state. The reasons are structural and persistent.

The asset test is the primary exclusion mechanism. A beneficiary with income below the poverty level but a savings account, life insurance policy, or modest retirement account above the threshold is ineligible for QMB in states that maintain the asset limit. The test was designed to target assistance to the poorest beneficiaries, but in practice it excludes people whose financial position is only marginally different from those who qualify. A beneficiary with $10,000 in savings is ineligible; a beneficiary with $9,000 qualifies. The difference in net worth is negligible. The difference in out-of-pocket health care costs is thousands of dollars per year.

Awareness is the second barrier. Most Medicare beneficiaries have never heard of Medicare Savings Programs. The programs are administered through state Medicaid agencies, not through Medicare, which means beneficiaries must navigate a Medicaid application process to access what is functionally a Medicare cost-assistance benefit. The branding disconnect, Medicare benefit administered through Medicaid, creates confusion that suppresses enrollment. SHIP counselors and community organizations represent the primary outreach channel, but their capacity is limited relative to the eligible population.

Stigma operates alongside ignorance. Some beneficiaries who are aware of MSPs decline to apply because they associate the programs with welfare. The application requires disclosure of income, assets, and personal financial details to a state Medicaid agency, and for beneficiaries who have never received means-tested benefits, that process carries a psychological cost that deters participation.

Application complexity compounds the problem. MSP applications vary by state and typically require documentation of income, assets, health insurance status, and identity. The process is separate from Medicare enrollment, separate from Part D enrollment, and in many states separate from LIS enrollment, even though eligibility for these programs substantially overlaps. A beneficiary who applies for LIS through Social Security and is found eligible should, by law, have that information transmitted to the state Medicaid agency to initiate an MSP application. In practice, many states did not follow this requirement consistently, which is precisely what the 2023 CMS streamlining rule was designed to fix.

The OBBBA Moratorium

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CMS finalized the Medicare Savings Program streamlining rule in September 2023. The rule required states to automatically enroll qualifying SSI recipients into QMB, use LIS data to initiate MSP applications without requiring a separate application from the beneficiary, align MSP and LIS definitions of family size, and simplify asset verification. CMS estimated the rule would increase MSP enrollment by nearly one million beneficiaries.

OBBBA imposed a moratorium on this rule through September 30, 2034. The Congressional Budget Office scored the moratorium at $66 billion in federal savings over ten years. Those savings come from one source: eligible beneficiaries who will not receive benefits they qualify for because the enrollment process remains too complex for them to navigate.

The moratorium is the most consequential MSP policy action in a decade, and it moved in the opposite direction from every previous reform effort. Both the Obama and Biden administrations sought to increase MSP enrollment through administrative simplification. OBBBA treats the enrollment gap as a fiscal feature rather than a policy failure. For the beneficiaries affected, the practical consequence is that the Part B premium ($202.90 per month in 2026), Part D costs, and Medicare cost-sharing will continue to consume income that MSPs were designed to protect.

States retain the option to implement the streamlining provisions voluntarily, even under the moratorium. The federal enforcement mechanism is paused, but the state authority to simplify MSP enrollment is not. Advocates in states with supportive Medicaid agencies can work toward voluntary adoption of LIS data-matching, automatic SSI-to-QMB enrollment, and asset test elimination without federal mandates. The states that have already eliminated asset tests and raised income limits demonstrate that state action is possible. The question is whether states facing simultaneous pressure from work requirement implementation, provider tax limits, and FMAP reductions have the bandwidth to take on voluntary MSP reforms.

The BALANCE Connection

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BALANCE will make GLP-1 medications available through Part D for weight management starting in 2027. Dual eligible and LIS beneficiaries will have the lowest cost-sharing tier under BALANCE’s negotiated pricing structure. MSP enrollment determines whether a beneficiary qualifies for LIS, and LIS determines the cost-sharing level for Part D drugs including GLP-1s under BALANCE.

The policy chain runs directly from MSP enrollment to GLP-1 access. A beneficiary with income below 135 percent of FPL who is enrolled in an MSP automatically receives full LIS, which means minimal copayments for BALANCE-covered medications. The same beneficiary who is eligible for an MSP but not enrolled pays standard Part D cost-sharing, which even under the IRA’s $2,000 annual out-of-pocket cap represents a meaningful financial barrier for a low-income senior.

The population most likely to benefit clinically from GLP-1 coverage, low-income seniors with obesity and related chronic conditions, is the same population most likely to fall into the MSP enrollment gap. The OBBBA moratorium on MSP streamlining means the enrollment infrastructure that would have connected these beneficiaries to lower-cost GLP-1 access will not be in place when BALANCE launches.

What Would Fix It

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Eliminating the asset test nationally would remove the most common exclusion mechanism. Fifteen states have done this. The administrative cost of verifying assets, which requires documentation of bank accounts, life insurance policies, burial funds, and retirement accounts, is substantial for both beneficiaries and state agencies. Eliminating the test simplifies enrollment, reduces administrative burden, and extends coverage to beneficiaries whose income qualifies but whose modest assets currently disqualify them.

Auto-enrollment using existing federal data is the highest-impact structural reform. Social Security Administration data, IRS income records, and LIS enrollment data collectively identify most MSP-eligible beneficiaries without requiring a separate application. The 2023 streamlining rule moved toward this model. The OBBBA moratorium paused it. Restoring and expanding auto-enrollment authority, whether through legislation or through a future administration’s rulemaking when the moratorium expires, remains the most direct path to closing the enrollment gap.

Scaling SHIP counselor capacity and community organization outreach is the near-term intervention available under current law. SHIP programs operate in every state and provide free Medicare counseling. Their counselors are already the primary enrollment assistants for MSP applicants. Funding these programs at a level that reflects the scale of the enrollment gap, rather than at current appropriation levels, would increase the number of eligible beneficiaries who receive help navigating the application process. The return on investment, measured in beneficiary savings and downstream health care cost avoidance, substantially exceeds the counseling cost.

Related Reading

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MCR-03_01 The One Big Beautiful Bill: What It Does to Medicare and Medicaid MCR-06_12 The Full Cognitive Burden: What Seniors and Caregivers Actually Navigate MCR-10_01 The LIS Landscape: Extra Help, Medicare Savings Programs, and the Low-Income Non-Dual Population