Medicare Part D Can Hinder Ability to Spend Down to Medicaid

Many states have programs allowing individuals above the Medicaid income thresholds to spend down excess income on health care costs and be eligible for Medicaid for a period of time. But those individuals with the Medicare prescription drug benefit -- Medicare Part D -- may experience some problems qualifying for Medicaid, including lapses in Medicaid coverage, according to a new issue paper from the Kaiser Commission on Medicaid and the Uninsured.

According to the paper, Medicare Part D recipients may not be able to spend down as quickly because they do not have large out-of-pocket drug expenses. This may cause them to have a lapse in Medicaid eligibility, which would impede their access to other health care services not provided by Medicare.

In addition, spend-down Medicare beneficiaries often do not attain Medicaid eligibility until late in the month and thus miss the cut-off for auto-enrollment into a Part D plan. While the federal Centers for Medicare and Medicaid Services has built in safeguards for individuals who experience a coverage gap, those safeguards do not specifically address spend-down beneficiaries.

To read the full paper, click here.