Capitol Recap: Some low-income Vermonters face sudden spike in health care costs when they turn 65
Older Vermonters living in near poverty are being saddled with thousands of dollars in out-of-pocket costs due to a state policy that reduces health care subsidies when they turn 65.
Jamie Draper and his wife, Linda, subsist on an annual income of about $28,000. Most Vermonters experiencing that level of financial hardship are eligible for publicly funded insurance that covers virtually all their health care costs.
But the Drapers are among a class of residents that isn’t allowed to enjoy the full benefits of Vermont’s Medicaid program. And the factor that disqualifies them is their age.
“Most people think when they go on Medicare they’re golden,” said Mike Fisher, chief of the Vermont Office of the Health Care Advocate. “Most people don’t realize how expensive it is for low-income people on Medicare.”
“If you are low income and are on Medicaid and then move to Medicare, you’re actually paying more for health care."Essex Junction Rep. Lori Houghton
Jamie Draper’s resume is about as Vermont as it gets.
He worked at a milk bottling plant in Fairfield and his grandfather’s sawmill in Morrisville. He spent two years at the asbestos mines in Eden, and he cleared ski trails with a scythe at Stowe Mountain, back when the resort’s signature draw was an American Steel & Wire single-chair up Mount Mansfield.
“Fifteen, 20 of us would line right up on the ski trail and each would take a row,” Draper said.
After a life of work in painting, construction, property maintenance and other hard labors, Draper and his wife have retired to a multi-unit apartment complex in Jeffersonville.
Last year, they received a cost-of-living increase in their social security benefits. It put them $18 over the monthly income limit needed to qualify for a program that pays for their Medicare supplemental insurance.
That $18 has cost them $329.80 per month in lost benefits. And in a house where expenditures on things like food, car insurance and laundry are recorded to the penny on white-lined paper, it’s been an excruciating financial setback.
“It’s hard,” Jamie Draper said. “With the way the food prices and stuff are, I’ve had to use a credit card. It’s either that or I don’t get any food.”
If the Drapers were under 65, their income would be well below the threshold needed to qualify for a state Medicaid program that covers almost all health care costs for low-income Vermonters. The moment someone turns 65, however, they have to enroll in Medicare. And once they do, the bar to access health care subsidies suddenly rises.
“And suddenly, 'happy birthday,' they’re 65 and they find they no longer qualify for Medicaid supports, for the supports to make sure they can get the care they need,” Fisher said. “We hear this story all the time at the health care advocate’s office — people who are mystified. They don’t understand what’s happened to them.”
Fisher is asking Vermont lawmakers to solve the problem by increasing income limits for something called the Medicare Savings Program. It’s the name of the program the Drapers were enrolled in before that Social Security cost-of-living adjustment put them just beyond the eligibility threshold.
The issue is resonating with lawmakers like Essex Junction Rep. Lori Houghton, the Democratic chair of the House Committee on Health Care.
“If you are low income and are on Medicaid and then move to Medicare, you’re actually paying more for health care,” Houghton said.
Houghton has introduced a bill that's modeled on legislation passed in Maine last year. Rep. Jessica Fay, who chairs the House Committee on Appropriations in the Maine Legislature, said the measure was “a matter of economic justice.”
Fay said previous income limits for the Medicare Savings Program in Maine had the effect of penalizing older women especially, because they historically had less earning power over their lifetimes. The same phenomenon is at play in Vermont — a 2019 report found that women over the age of 65 have a median annual income of $19,566, about $11,000 less than similarly aged men.
“The data shows that over time, their retirement money is just so much lower,” Fay said.
“People do what they do when medical debt hits them. They start making decisions around food, heat, rent, medicines.”Dr. Mark Pasanen, UVM Medical Center
Pam Spatafora knows the feeling. The Middlebury resident sacrificed the last few years of her professional career so she could be an unpaid caregiver for her husband after he developed Alzheimer’s disease.
“I just wasn’t really comfortable having him home by himself,” she said.
When Spatafora’s husband died, and his Social Security benefit ended, her monthly income dropped substantially. But, like the Drapers, even though she’s a low-income senior, she isn’t quite poor enough to qualify for the Medicare Savings Program.
Spatafora’s financial limitations are having a material effect on her health care. She has a progressive eye condition that makes her eyes watery and sensitive to the sunlight and could eventually lead to blindness.
Her doctor prescribed eye drops to treat the condition. But they’re not covered by her Medicare plan and would have cost almost $400 a month out of pocket.
“I said, ‘I can’t afford that,’” Spatafora said. “I’ve just foregone drugs that I probably could use because, you now, now I’m on a really fixed income.”
Vermonters making up to 138% of the federal poverty level — about $1,700 a month for an individual — are eligible for full Medicaid benefits. Once they reach the age of 65 and have to enroll in Medicare, the income cutoff for equivalent subsidies drops to $1,255 a month.
Dr. Mark Pasanen, with the University of Vermont Medical Center, said it’s an inexplicable policy quirk that’s having real-world effects on older Vermonters.
“People do what they do when medical debt hits them,” he said. “They start making decisions around food, heat, rent, medicines.”
Pasanen said he’s increasingly worried about what’s going to happen as more low-income Vermonters age into the Medicare program and lose the wraparound benefits they get in Medicaid.
“It’s bad health outcomes,” he said. “It’s increased costs down the road.”
Legislation that would increase eligibility for the Medicare Savings Program to 150% of the federal poverty level is under review in the House Committee on Health Care.
The Scott administration says the issue lawmakers are trying to solve is real. But Alex McCracken, director of legislative affairs for the Department of Vermont Health Access, said that the money needed to fund the eligibility increase is not included in the governor’s fiscal year 2025 budget proposal. And he said the administration won’t support any legislation that increases the spending plan Scott presented to lawmakers last month.
“We recognize that this is an incredibly tight budget year, and we remain committed to not increasing the burden on Vermonters or to the state,” McCracken said. “We are exploring creative alternatives with our partners in the agency and the Legislature as we work toward the shared goal of supporting the health care needs of vulnerable Vermonters.”
DVHA is currently conducting an analysis to determine how much additional state funding would be required to raise eligibility limits for the Medicare Savings Program. In addition to Maine, states including Massachusetts, Connecticut, New York and Indiana have instituted similar changes in recent years.
Pam Spatafora said the reform is long overdue. And she has a question for any elected official who thinks the income limits should stay where they are right now.
“Could you live on $1,255 a month?” she said. “I just want you to tell me how you would live on that money. What would you do to live on that money? What would you give up? Would you give up food? Would you give up gas in your car?”
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