Medicaid Asset Test Revisions May Increase Dual Eligibility for Seniors

Adjusting the Medicaid asset test to accurately reflect inflation levels could increase Medicaid eligibility for low-income, elderly, and disabled Medicare beneficiaries, according to a Health Affairs report.

More than 8 million Medicare beneficiaries are dually enrolled in Medicaid, allowing them to receive additional benefits at lower costs. Medicaid covers Medicare premiums and cost-sharing for these beneficiaries and offers coverage for services that Medicare does not cover including vision and dental care.

Dual eligible enrollment offers more benefits than the Medicare Savings Programs, which only cover Medicare premiums and sometimes cost-sharing, the report stated.

Medicare beneficiaries typically qualify for Medicaid by meeting state-specific income and asset limits, which are different from Medicaid’s income eligibility standards for nonelderly and nondisabled individuals.

The annual assessments for Medicaid’s asset test can place a heavy burden on administrative staff and applicants alike. In addition, the test can be restrictive. Most states use a fixed-dollar threshold based on asset limits from the Supplemental Security Income program which has not been adjusted for inflation since 1989.

As a result, the asset limits are unreachable for many Medicare beneficiaries. The current asset limits most states use are $2,000 for individuals and $3,000 for couples. An individual who had $1,500 in assets in 1989 would have met the limit. But in 2021, that $1,500 is equal to $3,200 after inflation, thus the individual would no longer be eligible for Medicaid.

Researchers used income and asset data from the Health and Retirement Study (HRS) to understand how Medicare beneficiaries’ Medicaid eligibility would be impacted if the asset test was adjusted in several different ways.

Among the more than 44 million senior Medicare beneficiaries in the data set, nearly 3.7 million were eligible for Medicaid in 2016, based on their incomes. Nearly 77 percent of those beneficiaries, or 2.8 million, met the Medicaid asset test as well.

The first scenario the researchers looked at was how these numbers would change if the asset test limits from 1989 were inflated by the Consumer Price Index (CPI). In 2016, after inflation, the new asset limits would have been $3,913 for individuals and $5,869 for couples.

Following this adjustment, the number of Medicare beneficiaries eligible for Medicaid would increase by 1.7 percent, researchers found.

The second scenario consisted of raising the Medicaid asset test limits to match the 2016 Medicare Savings Program income limit which would put the asset limits at $7,280 for individuals and $10,930 for couples.

This change would increase the number of eligible Medicare beneficiaries by 4.4 percent relative to the number of beneficiaries eligible in 2016. These newly eligible beneficiaries include individuals with lower education levels and people more likely to have activities of daily living limitations.

If the Medicaid asset test limits increased to $10,000 for individuals and $20,000 for couples, proposed in the Supplemental Security Income Restoration Act of 2019, 7.5 percent more Medicare beneficiaries would qualify for Medicaid coverage. This would bring the number of eligible individuals to nearly 3.1 million. In this scenario, the number of non-White beneficiaries eligible for Medicaid would be greater than the number of non-White beneficiaries who met the income criteria but not the asset limit.

The researchers included a final hypothetical scenario in their analysis that would allow all low-income Medicare beneficiaries to qualify for Medicaid coverage unless they held any investments, a secondary residence, or a business. In this situation, the number of eligible beneficiaries would increase by 20.5 percent and amount to nearly 3.5 million people.

Younger beneficiaries who had at least one activities of daily living limitation and assets below $50,000 were most likely to become newly eligible in this scenario.

“Our findings indicate that incrementally increasing asset limits might not greatly increase the number of newly eligible full-benefit Medicaid beneficiaries relative to the overall population of low-income beneficiaries but would target specific subpopulations of low-income people who could benefit from Medicaid’s supplemental coverage,” researchers concluded.