Rising Concerns Over Medicare Cliff Impact

A recent study reveals that approximately 280,000 low-income American seniors face significant healthcare challenges when transitioning from Medicaid to Medicare at age 65, a phenomenon known as the “Medicare Cliff.”

Why it matters: The Medicare Cliff leads to higher out-of-pocket medical costs and a substantial decline in overall health for vulnerable seniors, particularly women and those from minority communities.

The details:

• The Affordable Care Act expanded Medicaid eligibility for low-income adults aged 19-64, but this broader coverage ends at age 65 when Medicare begins.
• Medicaid offers more comprehensive coverage than Medicare, including long-term care, dental, vision, and hearing services.
• Seniors on the Medicare Cliff saw their out-of-pocket medical costs rise from $2,600 to $3,100 annually within two years.
• The percentage of seniors reporting fair or poor health increased from 34% in 2012 to 48% in 2018 after the Medicare Cliff took effect.

What they’re saying:

• “Once they have a birthday and turn 65, we flip the switch and they plummet into a sea of costs related to health care. These are the most vulnerable individuals.” – Ramsey Alwin, CEO of the National Council on Aging (NCOA)
• “Medicaid actually pays for some of Medicare’s co-insurance provisions, deductibles, and co-pays. 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.” – Marc Cohen, director of the Center for Long-Term Services and Supports at UMass Boston

The background: The Medicare Cliff could have been avoided if policymakers had expanded Medicaid eligibility past 65 when passing the Affordable Care Act. Confusing and conflicting notifications from Medicaid and Medicare often leave seniors feeling overwhelmed and anxious about their healthcare coverage.

What’s next: The NCOA plans to launch a national map to help low-income seniors access underutilized Medicare subsidy programs. Advocates hope Congress and the Biden administration will pass legislation to address the Medicare Cliff issue, emphasizing that it is not a partisan concern but a matter of ensuring financial protection for vulnerable seniors.

Full story

A recent study has raised concerns about 280,000 American seniors at risk of losing healthcare services as they transition from Medicaid to Medicare upon turning 65. This “Medicare Cliff” is causing alarm among experts and policymakers. Chris Fong, a Medicare specialist and CEO of Smile Insurance Group, said many people are blindsided by the Medicare cliff when someone on Medicaid turns 65 and qualifies for Medicare.

The qualifications change, with some states adding additional qualifications and lowering the income threshold. Due to differences in Medicaid and Medicare policies, many seniors suddenly find themselves unable to afford the healthcare services they previously had access to, leading to a decline in overall health. A study by the National Council on Aging (NCOA) and the LTSS Center highlighted these issues.

According to the NCOA, those affected tend to be women. They often struggle to cover the healthcare services they need, resulting in long-term declines in health. The study showed that in 2012, 34 percent of seniors on the Medicare Cliff reported their health as fair or poor; by 2018, that figure had risen to 48 percent.

Additionally, the out-of-pocket medical costs for these individuals have increased from an average of $2,600 yearly to $3,100 within two years. Michael Ryan, a finance expert and founder of michaelryanmoney.com, explained it’s like being forced to switch from an economy car to a luxury vehicle with higher running costs. Medicaid covers low-income individuals, pregnant women, and those living with disabilities, while Medicare serves people aged 65 and older.

Medicaid generally offers more comprehensive coverage, including nursing home care, which is often not covered by Medicare.

Medicare cliff’s impact on seniors

This disparity leaves many seniors facing increased medical expenses they cannot afford.

The NCOA found that the typical person at the Medicare Cliff is a woman (58 percent) and retired without job income (54 percent). These individuals typically reported a median household income of $35,900. Under Medicaid, recipients generally only pay small copays with most other costs covered, while Medicare often requires higher out-of-pocket expenses.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, noted that many Americans still assume Medicare will take care of all their medical expenses when they reach the qualifying age. The reality is there are several healthcare resources and services Medicaid covers that aren’t reimbursed through Medicare. Last year, roughly 12.5 million people were dually enrolled in Medicare and Medicaid, according to health research firm KFF.

Fong mentioned that discussing the Medicare Cliff with clients is challenging, as many are unaware of the considerable healthcare costs they will face when they no longer qualify for full Medicaid assistance. To address this issue, some advocate for Medicare to adjust its limits to match those of non-Medicare Medicaid programs, but there has been limited progress so far. Others propose that traditional Medicare should cover supplemental services like dental or vision insurance.

Fong advised those on Medicaid who are approaching 65 to speak to their state’s Medicaid department to understand how their benefits will be impacted. Beene echoed this, encouraging people to start planning their coverage strategy as their Medicare enrollment approaches. If something they depend on isn’t covered, they should consider senior supplemental plans for additional coverage, which can be beneficial in the long run despite potentially costing more out-of-pocket.