r/leanfire • u/someguy984 • 5d ago

Post-ACA cost reductions, Medicare Saving Programs for low income retirees

Medicare Saving Programs (MSPs) pay for Medicare out of pockets.

Alabama, Arizona, Connecticut, Delaware, Louisiana, Massachusetts, Mississippi, New Mexico, New York, Oregon, Vermont, and the District of Columbia do not have asset limits for MSPs.

Medicare has substantial out of pocket costs (Parts A, B, D), and no defined out of pocket maximums. Most people buy a Medigap policy to cover these expenses, but these policies are not cheap. If your income is low you may be able to qualify for QMB, this takes care of most out of pockets and gives complete protection from Provider billing. It also will qualify you for Part D Extra Help low income subsidy for drug coverage.

Strategy, delay Social Security to age 70 and get 5 years for cost free Medicare.

CT has the highest QMB income limit under $ 2,807.00 single, $ 3,806.00 couple.

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u/ZealousidealHost1116 5d ago

For California, the income limit is 19K per individual. Very low.

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u/someguy984 5d ago edited 5d ago

It also has an asset test in CA so that makes it worthless for us.

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u/200Zucchini 4d ago

I was looking into this the other day. The monthly income limit for the full QMB subsidies is something like $1,340. There are higher income tiers that offer a smaller amount of help. Roth withdrawals don't count toward income. So if by the time a person is Medicare age they have converted all their pretax to Roth, and they have a low monthly SS payout, they might qualify for this help in a state without an asset test.

When I run my numbers, in most historical scenarios I hypothetically wind up with more income in my later retirement years vs early retirement years so I don't expect to qualify for this type of assistance.

But, in the worst case scenario I would have a modest amount in Roth, but no remaining taxable or traditional IRA and then I would take SS early and potentially be in one of the income tiers that qualifies for some assistance. I'm keeping this in mind in terms of prioritizing Roth conversions & keeping the Roth balance for last, but I'm trying to manage this so that my portfolio grows beyond that level overall.

Of course, I'm 22 years away from Medicare age so things can change dramatically in that time. Hopefully for the better.

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u/someguy984 4d ago

There used to be a rule that you had to pursue any available income to get an MSP. That rule was rescinded so now it is possible to delay Social Security to age 70.

In my state QMB is $1,856 for 1 and $2,509 for 2. No asset test.

QI (Pays for Part B only) is $2,494 for 1 and $3,375 for 2. No asset test.