Medicare’s Role for People Under Age 65 with Disabilities

Medicare was established in 1965 as the health insurance program for Americans age 65 and over; since 1973, it has also covered people under age 65 who receive Social Security Disability Insurance (SSDI) benefits. To qualify for SSDI, people must be unable to engage in “substantial gainful activity” because of a medically-determined physical or mental impairment expected to last at least 12 months or until death. Medicare also covers certain widows and widowers under age 65 with disabilities, as well as disabled adult children of retired, deceased, or disabled workers. Today, Medicare covers 9.1 million people with disabilities who are under age 65, or 16% of the Medicare population, up from 7% (1.7 million people with disabilities under age 65) in 1973. When people under age with disabilities on Medicare turn 65, their coverage from Medicare continues.

How do people under age 65 with disabilities qualify for Medicare?

People under age 65 become eligible for Medicare if they have received SSDI payments for 24 months. Because people are required to wait five months before receiving disability benefits, SSDI recipients must wait a total of 29 months before their Medicare coverage begins. People under age 65 who are diagnosed with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) automatically qualify for Medicare upon diagnosis without a waiting period. Of those who were receiving SSDI in 2014, 34% qualified due to mental disorders, 28% due to diseases of the musculoskeletal system and connective tissue, 4% due to injuries, 3% due to cancer, and 30% due to other diseases and conditions.

What are the characteristics of Medicare beneficiaries under age 65 with disabilities compared to beneficiaries age 65 or older?

The demographic, socioeconomic, and health status profiles of Medicare beneficiaries under 65 with disabilities vary from those of beneficiaries 65 and older in a number of ways.

Income: Compared to beneficiaries over 65, a substantially higher proportion of beneficiaries under 65 with disabilities had low yearly incomes in 2012. Compared to 13% and 39%, respectively, of older beneficiaries, over a quarter (24%) of younger beneficiaries with disabilities had incomes of less than $10,000 annually and two-thirds (67%) had incomes of less than $20,000.

Several differences between Medicare beneficiaries under 65 and those 65 or older

Black (18% and 8%, respectively) and Hispanic (13% and 9%, respectively) beneficiaries under the age of 65 make up a bigger proportion than older beneficiaries, as do male beneficiaries (53% and 44%, respectively).

Health: In 2012, 29% of senior beneficiaries of Medicare had a cognitive or mental impairment, compared to 65% of all younger beneficiaries. This includes memory loss that affects daily activities, difficulties making choices, attention issues, and interest loss within the previous year. In comparison to 20% and 34% of beneficiaries aged 65 or older, respectively, nearly 6 in 10 (59%) and nearly the same number (58%) reported experiencing one or more impairments in their daily activities. However, about the same percentage of younger beneficiaries with impairments and older beneficiaries (31% and 28%, respectively) report having five or more chronic diseases.

Medicare Beneficiaries Under 65 Compared to Those 65 or Older: Selected Health Status Measures

How do sources of supplemental coverage and prescription drug coverage differ for Medicare beneficiaries under age 65 with disabilities and older beneficiaries?

Supplemental coverage

Most Medicare recipients have public or private supplemental insurance to help fund Medicare’s cost-sharing requirements, including those under 65 with impairments. Because of their relatively low incomes, individuals with disabilities under the age of 65 rely on Medicaid substantially more than beneficiaries over the age of 65 do (35% versus 10%). Many persons with disabilities need services that Medicare does not cover, especially long-term treatments and supports, and Medicaid helps with Medicare premiums and cost-sharing requirements.

Medicare Beneficiaries Under 65 Who Had Supplemental Insurance in 2012 Compared to Those 65 or Older

Compared to older beneficiaries, beneficiaries with disabilities under the age of 65 have a lower percentage of employer-sponsored coverage (14% vs. 29%, respectively), Medigap (2% vs. 17%, respectively), or Medicare Advantage plan enrollment (27% vs. 31%, respectively). Because they have retiree health benefits from prior employers or are actively employed and have Medicare as a secondary payer, a greater proportion of older beneficiaries have employer-sponsored coverage. The fact that insurance companies are not required by federal law to sell Medigap policies to individuals under the age of 65, and while some states do impose this requirement, others do not, may be a significant factor in the small percentage of beneficiaries with disabilities who report having a supplemental Medigap policy. When determining whether to offer a Medigap policy to those with disabilities and how much to charge them, insurers may also employ medical underwriting. In contrast, those who become eligible for Medicare at age 65 have a six-month open enrollment period during which they can acquire Medigap insurance without having their health status or place of residence taken into account, in addition to certain other special enrollment periods.

Compared to 12% of beneficiaries 65 and older, little over one in five beneficiaries (21%) under 65 have no supplemental coverage. Higher rates of access issues are associated with Medicare beneficiaries who do not have supplemental insurance, but these issues are more prevalent in younger beneficiaries with disabilities who do not have supplemental insurance than in older beneficiaries. Examples of these issues include not seeing a doctor for a health issue when they think they should (31%) and having difficulty receiving necessary medical care (17% and 5%), respectively. However, younger beneficiaries with disabilities have access and cost-related problems at a higher rate than older beneficiaries, regardless of whether they have supplemental coverage (see explanation under “Access to Care and Cost-Related Problems” below).

Prescription drug coverage

The primary source of drug coverage for all Medicare beneficiaries is the Medicare Part D drug benefit, which provides outpatient prescription drug coverage through private stand-alone prescription drug plans (PDPs) or Medicare Advantage drug plans (MA-PDs). Beneficiaries under 65 with disabilities are covered to a greater extent than beneficiaries 65 and older, however.

In contrast to the roughly two-thirds (63%) of older beneficiaries who are enrolled in Part D, seventy-five percent (75%) of Medicare beneficiaries under the age of 65 are enrolled in a Part D drug plan, either a stand-alone prescription drug plan (PDP) (52%) or a Medicare Advantage drug plan (24%) As a result of their lower incomes and a higher rate of Medicaid enrollment, more than half of all Medicare beneficiaries under the age of 65 (55%) receive the Part D

Comparison of Part D Low-Income Subsidy (LIS) Enrollment and Prescription Drug Coverage Among Medicare Beneficiaries Under 65 and Those 65 and Older in 2012

A similar percentage of younger beneficiaries with disabilities and older beneficiaries (12% vs. 14%, respectively) have no stated source of creditable drug coverage. Creditable coverage, which might include, for instance, coverage through employer-sponsored retiree health benefits, the Department of Veterans Affairs, and TRICARE, is defined as medication coverage that is at least equal in value to the basic Part D benefit.

How do Medicare spending and use of services differ for beneficiaries under age 65 with disabilities and older beneficiaries?

Medicare per capita spending

Traditional Medicare members under the age of 65 experience greater average total Medicare spending, primarily as a result of increasing Part D prescription drug costs. In 2014, the average Medicare per beneficiary under the age of 65 was $13,098; this was approximately a third higher than the average Medicare per beneficiary above the age of 65 ($9,972). The gap narrows significantly to $9,281 for recipients under the age of 65 and $8,814 for those over the age of 65 when Part D prescription expenses are taken out of the equation. Compared to beneficiaries over 65, beneficiaries under 65 spend less per person on post-acute and hospice care but more per person on medications covered by Part D and inpatient and outpatient services.

Average Medicare Per Capita Spending by Type of Service for Beneficiaries Under 65 With Disabilities and Over 65, 2014

Use of medical services

Younger beneficiaries with disabilities had a slightly lower percentage of office visits than older beneficiaries in traditional Medicare in 2012 (66% vs. 77%, respectively), but a slightly higher percentage of younger beneficiaries than older beneficiaries (19% vs. 14%, respectively) visited the emergency room. Dental services were used by fewer beneficiaries with disabilities in their younger years than in their older years (35% versus 49%, respectively), and as would be expected, fewer beneficiaries with disabilities used post-acute care services like skilled nursing facility stays and home health visits. The vast majority of both groups, however, utilized prescription medicines (88% and 90%, respectively), and the same percentage of both groups spent time in the hospital (18%).

How do beneficiaries’ out-of-pocket spending and access to care differ for those under age 65 with disabilities and those age 65 and older?

Out-of-pocket spending

Younger beneficiaries of traditional Medicare spend much less out of pocket on average, despite the fact that overall Medicare per capita spending is higher for beneficiaries with disabilities under the age of 65 than for older beneficiaries. This is probably because a higher proportion of younger beneficiaries with disabilities than older beneficiaries get Medicaid coverage (35% against 10%, respectively), as well as Part D Low-Income Subsidies (55% versus 16%), which assist in paying their premiums and cost-sharing. Overall, younger beneficiaries with impairments spend 40% less out of pocket than older beneficiaries ($3,706 vs. $6,146 on average). In terms of insurance premiums ($1,383 and $2,979, respectively) and medical and long-term care services ($2,324 and $3,167, respectively), younger beneficiaries have lower average out-of-pocket expenses than older beneficiaries.

Disability beneficiaries enrolled in conventional Medicare on average spent 29% of their total non-premium out-of-pocket expenses on medical providers in 2012, followed by 26% on prescription medicines, and 20% on long-term care facility costs. In terms of out-of-pocket expenses, these three services also ranked in the top three for older beneficiaries, but in a different order: facilities accounted for the largest portion of older beneficiaries’ out-of-pocket expenses (31%), followed by medical providers (24%) and prescription drugs (17%).

Access to care and cost-related problems

Across a variety of standard criteria, the majority of Medicare beneficiaries have access to care, but a greater proportion of younger beneficiaries with disabilities than older beneficiaries report having a variety of access issues, frequently because of the expense of care. Compared to 8% of older beneficiaries, nearly one-quarter (23%) of younger beneficiaries with disabilities reported having a health issue that they believed a doctor should have examined but had not. In addition, 25% of beneficiaries with impairments who did not consult a doctor cited cost as the primary deterrent, compared to 14% of older beneficiaries. In 2013, 1 in 6 (16%) beneficiaries with disabilities under the age of 65 had difficulty accessing necessary medical treatment, compared to only 4% of beneficiaries above the age of 65. Nearly half (45%) of younger beneficiaries with disabilities who reported having problems accessing treatment said it was because they lacked the funds or the cost was too high, compared to 31% of older recipients.

A Comparison of Selected Health Care Access Measures for Medicare Beneficiaries Under 65 and Those 65 or Older

The fact that both older Medicare beneficiaries and younger Medicare beneficiaries with disabilities have access to some form of drug coverage does not imply that both groups have an equal number of access and cost-related issues when trying to obtain medications. A greater proportion of beneficiaries under 65 than beneficiaries over 65 report that they frequently or occasionally: skipped doses to extend the duration of prescriptions (15.4% and 4.5%, respectively); spent less money to save for needed prescriptions (22% and 5%, respectively); delayed getting a prescription because of cost (21% and 5%, respectively); and decided not to fill a prescription due to cost.

Comparing Certain Measures of Prescription Drug Access for Medicare Beneficiaries Under 65 to Those 65 or Older

A much higher percentage of beneficiaries with disabilities than older beneficiaries report worrying about their health more than other people their age (63% versus 18%), trying to keep their illnesses to themselves when they get sick (50% versus 35%, respectively), and doing almost anything to avoid going to the doctor (38% versus 27%, respectively). This may be related to their higher likelihood of experiencing cost-related access problems.