Social Security income may affect Medicaid eligibility

in /Ask Phil by

When you turn 65 and qualify for Medicare, some or all of your Medicare costs could be paid by Medicaid if you qualify. People in this situation are known as “dual eligibles” and they number more than 10 million!

Medicaid eligibility is based in part on your income, and includes part of your Social Security benefits. Here are the basics on taxation of Social Security benefits.

Medicaid is regulated at the state level, and states have different income standards. The State Health Insurance Assistance Program (SHIP) provides free Medicare counseling and should have someone in an office in your state who can help you.

You will need to know details about your Social Security benefits when you contact SHIP. If you don’t already have these details, you can open an online My Social Security account. It will show you projections of your benefits at different claiming ages.

Peter – Colorado: I’m 61 years old and began receiving Social Security Disability Income (SSDI) payments a few months ago. Now, I’ve been told that I’m being transitioned from Medicaid to Medicare and have had my SSDI monthly benefit reduced, and that these funds will be used to pay a monthly Medicare Part B premium. Are there going to be other cost implications of this Medicaid-to-Medicare transition? What about my dental care, which I just re-started, after years of focusing on stroke recovery efforts?

Phil Moeller: I don’t know for sure, but it sounds like your SSDI payments have increased your income enough to make you no longer eligible for Medicaid benefits in Colorado. I guess this is a “good” thing, but it can seem otherwise.

That’s especially true insofar as dental care is concerned. Medicaid covers some of this care but Medicare does not cover routine dental care. You can buy private dental insurance, but it provides modest benefits.

You also may need a Medicare Part D plan to cover prescription drugs that were covered at no cost to you under Medicaid. Lastly, Part B of Medicare pays only 80 percent of covered expenses.

I would look into getting a Medicare Advantage (MA) plan with Part D coverage bundled in. It will protect you from catastrophic Part B exposure. Most MA plans also provide some dental coverage. You would still need to make the Medicare Part B payment plus any MA premium. However, MA plans generally are the cheapest solution for someone in your situation.

These plans do limit coverage to doctors and hospitals in the plan’s provider network, so if you have doctors you want to keep seeing, you should ask them if they are in the network of whatever MA plan you like.

You can do an online review of MA plans at Medicare’s Plan Finder site.