Medicare is the federal health insurance program for people aged 65 or older, certain younger people with disabilities, and people with end-stage renal disease. It has different parts that cover specific services, and eligibility and coverage rules can be complex. However, Medicare does not have limits on how much money you can have in the bank or other personal assets and still qualify for coverage.
Medicare Eligibility Basics
The primary factors that determine your eligibility for Medicare are:
- Being aged 65 or older
- Being under age 65 with certain disabilities or end-stage renal disease
- Being a U.S. citizen or legal permanent resident who has lived in the U.S. for at least 5 consecutive years
Your income, savings, investments or other assets are not part of the eligibility criteria. So you can have as much money in the bank as you want and still get Medicare, as long as you meet the age or disability requirements.
Medicare Parts and Costs
Medicare has different parts that cover specific services:
- Part A (Hospital Insurance) – Covers inpatient hospital stays, skilled nursing facility care, hospice care and some home health care. Most people get Part A premium-free, but you may have to pay a deductible and coinsurance.
- Part B (Medical Insurance) – Covers doctor’s services, outpatient care, durable medical equipment (DME), and some preventive services. You pay a monthly premium (based on income) and deductible/coinsurance for services.
- Part C (Medicare Advantage) – Private insurance plans that provide an alternative to Original Medicare (Parts A and B). Costs vary by plan.
- Part D (Drug Coverage) – Helps cover prescription drug costs. You pay a monthly premium and deductible/copays determined by the specific plan you choose.
While having higher income can result in paying higher premiums for some parts of Medicare, there are no income limits to qualify for coverage. Your personal assets also do not affect the cost of Medicare coverage.
Medicare Savings Programs
Medicare Savings Programs provide financial assistance with Medicare costs for beneficiaries with limited income and assets. They can help pay for Part A and/or Part B premiums, deductibles and coinsurance. The income and asset limits to qualify for these programs are:
| Program | Individual Monthly Income Limit | Couple Monthly Income Limit | Individual Asset Limit | Couple Asset Limit |
|---|---|---|---|---|
| Qualified Medicare Beneficiary (QMB) | $1,153 | $1,546 | $8,400 | $12,600 |
| Specified Low-Income Medicare Beneficiary (SLMB) | $1,379 | $1,851 | $8,400 | $12,600 |
| Qualifying Individual (QI) | $1,549 | $2,080 | $8,400 | $12,600 |
| Qualified Disabled & Working Individuals (QDWI) | $4,615 | $6,190 | $4,615 | $6,190 |
So as you can see, even the Medicare Savings Programs allow beneficiaries to have several thousand dollars in assets and still qualify for assistance. Outside of these specific programs, though, Medicare does not limit how much money you can have in savings or investments and receive coverage.
Why There Are No Asset Tests for Medicare
There are a few reasons why Medicare does not have asset limits like some other government benefit programs:
- Universal coverage – Medicare is intended to provide health coverage for all seniors and certain younger disabled individuals, regardless of income level.
- Contribution-based – Most Medicare beneficiaries have paid into the system through payroll taxes during their working years. Higher-income people tend to contribute more taxes over their lifetimes.
- Complex to administer – Checking personal assets would require much more reporting bureaucracy and oversight, increasing administrative costs.
- Asset levels can change – Peoples’ savings and investments tend to fluctuate over time, requiring constant monitoring and adjustments.
The limited income-related costs in parts of Medicare balance capturing higher contributions from wealthier beneficiaries while not restricting coverage just because someone has managed their finances prudently over the years.
Strategies to Reduce Medicare Costs
While there are no Medicare asset limits, higher-income beneficiaries pay higher premiums for some parts of Medicare. Here are some strategies to potentially reduce your Medicare costs:
- Invest in non-income generating assets – Assets like savings accounts, stocks that pay dividends or bonds that pay interest count toward your Modified Adjusted Gross Income (MAGI), which Medicare uses to determine premium costs. Investing more in non-income generating assets like non-dividend stocks or real estate can help lower your reportable MAGI.
- Use tax-advantaged accounts – Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can reduce your taxable income. You can use HSA funds to pay Medicare expenses tax-free.
- Donate to charity – If you claim itemized deductions, charitable donations help lower your reportable MAGI. You can donate up to $100,000 from an IRA tax-free to a qualified charity if you’re 70.5 or older.
- Talk to a financial advisor – They can look at your overall financial situation and suggest ways to structure your income and assets to potentially reduce your Medicare costs while still meeting your retirement goals.
The key is being strategic about how you take income to avoid pushing yourself into a higher premium bracket. With some advance planning, you can often find ways to optimize your Medicare spending while still maintaining sufficient assets to live comfortably in retirement.
Can You Have Secondary Insurance With Medicare?
Yes, you can have other insurance in addition to your Medicare coverage. Here are some common types of secondary insurance people get with Medicare:
- Medigap – Also called Medicare Supplement Insurance. This is extra private insurance that helps pay for Medicare out-of-pocket costs like copayments, coinsurance and deductibles.
- Employer insurance – Some employers offer retiree health plans as a supplement to Medicare. This can include dental, vision and hearing coverage.
- Medicaid – Provides additional coverage for low-income Medicare beneficiaries, including nursing home care costs.
- Veterans benefits – Veterans may qualify for additional coverage through VA health benefits, TRICARE or VA prescription drug coverage.
- Dental, vision, hearing plans – Since Medicare does not cover most dental, vision or hearing costs, many people purchase extra insurance for these services.
Having secondary insurance can help fill coverage gaps in Medicare and reduce your out-of-pocket expenses. Just make sure you understand how the different policies work together so there’s no confusion about which plan pays first.
Does Medicare Cover Long-Term Care Costs?
For the most part, Medicare does not cover long-term care services. Here are some key facts about Medicare and long-term care coverage:
- Medicare only pays for medically-necessary skilled nursing facility care for up to 100 days after a hospital stay.
- Custodial long-term care provided in nursing homes, assisted living facilities or at home is generally not covered.
- Medicare does not cover room and board charges if you live in a nursing home or assisted living.
- Medicare may pay for some short-term skilled home health care, but not ongoing personal care services.
- Hospice care for terminally ill beneficiaries has some coverage under Medicare Part A.
Since Medicare does not adequately cover long nursing home, home care or assisted living stays, many people purchase private long-term care insurance or qualify for Medicaid to help pay these costs. Talking to a long-term care insurance specialist is recommended to plan for how you will cover potential future long-term care expenses.
Can Medicare Be Taken Away?
It is very rare for Medicare to be taken away or terminated. Here are some reasons it could potentially happen:
- You commit Medicare fraud, such as falsifying medical bills.
- You are no longer a U.S. resident or legal citizen.
- You go to prison following a felony conviction.
- You lied about or withheld information on your initial Medicare application.
- You were actually not eligible for Medicare when you first received it (very uncommon).
In most cases, the termination only applies to the part of Medicare related to the issue – e.g. Part D drug coverage for prescription fraud. And your Medicare benefits can be reinstated once the problem is resolved.
Barring any extreme circumstances like those above, Medicare recipients maintain their coverage for life as long as they keep paying any required premiums. Having lots of money in the bank or other assets does not lead to getting your Medicare taken away.
Conclusion
Medicare eligibility and coverage depend on your age, disability status and legal residency – not on your personal financial situation. While income does affect the costs of certain parts of Medicare, there are no restrictions or limits on the total assets you can have in savings or investments and still qualify for Medicare coverage. With some planning, most beneficiaries can structure their finances in retirement to maximize their Medicare benefits.