How the ‘Medicare Cliff’ is elevating prices and worsening well being for a lot of older low-income adults

Jul 9, 2024 | blog

When you flip 65, a ceremony of passage is qualifying for Medicare to cowl most of your well being prices. But for greater than 1 / 4 of one million of low-income Americans, that day brings them perilously to what’s often called the Medicare Cliff.

These individuals—predominantly feminine and sometimes Black or Hispanic—have considerably increased out-of-pocket medical prices in comparison with others with Medicare. They additionally expertise a considerable worsening of their well being within the two years after hitting the Medicare Cliff, in accordance with a new research by the National Council on Aging and the LeadingAge LTSS Center at University of Massachusetts, Boston.

“Once they have a birthday and turn 65, we flip the switch and they plummet into a sea of costs related to health care,” says Ramsey Alwin, CEO of the National Council on Aging (NCOA). “These are the most vulnerable individuals.”

What is the Medicare Cliff?

The Medicare Cliff is a mix of the Affordable Care Act’s broadening of eligibility for Medicaid and conflicting Medicare guidelines.

The Affordable Care Act—typically known as Obamacare—let states develop their Medicaid applications to cowl low-income adults aged 19-64 with incomes as much as 138% of the federal poverty stage (roughly $21,000 for a person in 2024). Before that, Medicaid eligibility was restricted to individuals with incomes under the U.S. poverty price.

But that broader earnings quantity for Medicaid ends at age 65. As a outcome, roughly 280,000 Americans every year then lose their Medicaid eligibility when Medicare begins for them. Women are extra seemingly than males to get on the Medicare Cliff, Alwin says, as a result of ladies are inclined to have decrease wages resulting from pay inequity and time without work for caregiving.

What occurs on the Medicare Cliff?

Once individuals are on the Medicare Cliff, they often incur a lot increased out-of-pocket well being prices resulting from premiums, deductibles and co-pays which might be increased in Medicare than in Medicaid.  

Medicare doesn’t pay for long-term care prices; Medicaid does. Traditional Medicare additionally doesn’t cowl dental, imaginative and prescient, or listening to prices, though different Medicare Advantage plans from non-public well being insurers usually do.

The NCOA report discovered that individuals who wound up on the Medicare Cliff noticed their out-of-pocket medical prices rise from $2,600 yearly to $3,100 inside two years.

“Medicaid actually pays for some of Medicare’s co-insurance provisions, deductibles and co-pays,” says Marc Cohen, one of many co-authors of the research and director of the Center for Long-Term Services and Supports at UMass Boston. “So, you can end up in this weird situation where because you lose Medicaid coverage when you hit age 65, you end up having greater out-of-pocket medical expenses.”

The research additionally confirmed a steep rise within the worsening of well being of individuals after stepping onto the Medicare Cliff.

In 2012—earlier than the Affordable Care Act took impact—34% of individuals whose incomes would have put them on the Cliff reported their well being as honest or poor. By 2018, after the Medicare Cliff occurred, 48% described their well being that method.

“As a result of the higher out-of-pocket expenses, maybe they’re making choices to access the health system—the old story about cutting pills in half to save on the drug costs,” stated Cohen. “You also have access to certain services in Medicaid that you don’t with Medicare.”

How the Medicare Cliff might have been prevented

The Medicare Cliff might have been prevented if policymakers had expanded Medicaid eligibility previous 65 when passing the Affordable Care Act.

“We knew when we made [Medicaid] eligibility more generous that this would be a brutal transition, but the political will wasn’t exercised to smooth it out,” says Ramsey.

Mixed messaging about well being protection at 65

People who discover themselves on the Medicare Cliff additionally usually get complicated, typically conflicting, notifications from Medicaid and Medicare, in accordance with the NCOA report.

“A straightforward message of the status of your Medicaid and the transition into Medicare would go a long way,” says Alwin.

Researchers had been informed that the notices provoked anxiousness for some on the Medicare Cliff and made them really feel overwhelmed by the brand new well being protection decisions they wanted to make.

“A lot of times, they don’t find out until the first time they’re accessing benefits under Medicare or get a bill and they say, ‘I haven’t seen this bill before,’ because they didn’t realize that Medicaid under 65 was paying for some of that,” Cohen says.

Underutilized Medicare subsidy applications

There are federal and state Medicare subsidy applications for low- and moderate-income Americans, however they’re vastly underutilized. Only about half of people that qualify for Medicare Savings Programs use them.

“A lot of people don’t even know these programs exist,” says Cohen.

AARP estimates that at the least 1.47 million Americans might save $2,000 or extra every year by way of Medicare Savings Programs that assist pay Medicare Part A, B and D premiums and deductibles, co-insurance and co-payments.

The National Council on Aging believes extra low- and moderate-income Americans would know concerning the subsidy applications if Congress and the President elevated funding to get the phrase out.

Later in July, the National Council on Aging plans to launch a nationwide map with details about who’s eligible for Medicare Savings Programs and subsidies for Part D prescription drug protection with Medicare. The purpose is to raised goal individuals who qualify and assist them enroll.

“I’m feeling hopeful and optimistic about that,” says Alwin.

Alwin and Cohen hope Congress and the Biden administration will go a legislation to finish the Medicare Cliff issues.

“This is not a Democratic or Republican issue,” stated Cohen. “It’s like you’re saying these people are worthy of having financial protection until they hit 65.”

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