Medicare Savings Programs and Extra Help: the benefits most people miss

Medicare is not free, and for retirees on modest incomes the premiums and cost-sharing can eat an alarming share of a Social Security check. What far too few people know: there are federal programs that can pay your Part B premium outright and cut your prescription costs to a few dollars — and the income limits are more generous than most assume. Millions of eligible people never apply, leaving thousands of dollars a year on the table simply because nobody told them the programs exist.

Medicare Savings Programs: help with premiums and cost-sharing

Medicare Savings Programs (MSPs) are run by your state Medicaid agency and help pay Medicare costs for people with limited income and assets. The headline benefit of the most common program is that it pays your entire Part B premium — worth roughly $2,000+ a year by itself — and some tiers also cover deductibles and coinsurance. There are several tiers with rising income limits; the higher tiers pay less but still cover that Part B premium.

• QMB (Qualified Medicare Beneficiary): the richest — pays Part B (and often Part A) premiums plus deductibles, coinsurance, and copays.
• SLMB and QI: pay your Part B premium at somewhat higher income limits.
• All tiers have both income and (in most states) modest asset limits — but several states have loosened or dropped the asset test, so apply even if you think you're slightly over.

Extra Help: the prescription drug subsidy

Extra Help (also called the Part D Low-Income Subsidy) dramatically reduces or eliminates Part D premiums and deductibles and caps copays at just a few dollars per prescription. For someone on several medications, it can be worth thousands of dollars a year. Recent expansions raised the income limit and made the full subsidy available to more people. You apply through Social Security (ssa.gov or 1-800-772-1213), and it's a short application.

Where to apply

The bottom line

If Medicare's premiums and drug costs strain your budget, the Medicare Savings Programs and Extra Help can pay your Part B premium and cut your prescriptions to a few dollars — often worth several thousand dollars a year combined. The limits are higher than most people think, qualifying for one often unlocks the other, and free SHIP counselors will walk you through it. The only way to lose these benefits is to never apply.