New Research Highlights Supplemental Coverage “Cliff” For Some with Medicare

A new research article published in Health Affairs examines the supplemental coverage “cliff” that some people with Medicare may experience. These beneficiaries are generally people who don’t qualify for Medicaid but can’t afford a private plan.

For most people with Original Medicare, supplemental coverage helps pay for deductibles, coinsurance, and copayments. This insurance may be from Medicaid, an employer, or a Medigap plan, and may also cover some services that Medicare does not.

However, not all Original Medicare beneficiaries have supplemental coverage. One prominent coverage gap is among the nearly 30% of beneficiaries with incomes between 100% and 200% of the federal poverty level (FPL). They exceed the income limit for Medicaid supplemental coverage (which the article defines as the Qualified Medicare Beneficiary program) but frequently lack access to an affordable alternative.

This coverage cliff is a steep one. According to the study, beneficiaries with incomes even slightly above the 100% FPL threshold were nearly 26% less likely to have supplemental coverage than those with incomes just below it.

Beneficiaries affected by this abrupt difference in exposure to cost-sharing were more likely to face high costs and to forego care. They incurred an additional $2,288 in out-of-pocket spending over the course of two years, were 33% more likely to see catastrophic health care spending, and used 55% fewer outpatient services per year. They also filled fewer prescriptions, in part because of their relatively low uptake of Part D subsidies, which Medicare beneficiaries automatically receive if they have Medicaid.

Medicare Rights agrees with the study’s conclusion that “expanding eligibility for Medicaid supplemental coverage and increasing take-up of Part D subsidies would lessen cost-related barriers to health care among near-poor Medicare beneficiaries.” We continue to urge the Biden administration and Congress to strengthen Medicare in ways that will help improve health care and prescription drug access and affordability.

Read the article abstract.