Medicare Part D low-income subsidies expanded in January 2024, but more needs to be done to ensure that eligible beneficiaries enroll.

Background: The Inflation Reduction Act of 2022 extended full low-income subsidies (LIS) to a small group of Medicare Part D recipients with limited assets and incomes between 135% and 150% of the Federal Poverty Level beginning in January 2024. This policy may result in small enrollment gains among beneficiaries eligible for the new benefits, but the biggest problem with the current LIS program is underenrollment across all eligibility groups. Prior research has shown that underenrollment has been a persistent problem since the LIS program began in 2006, yet little has been done to correct the situation.

Objective: To identify individual-level factors associated with failure to enroll among low-income beneficiaries eligible for both full subsidies and partial subsidies under the LIS program.

Methods: We used 2019 Medicare Current Beneficiary Survey data for the study. The Medicare Current Beneficiary Survey is uniquely suited for this work because it contains administrative data on LIS enrollment plus extensive survey information on financial resources necessary to establish program eligibility. We conducted descriptive and multivariate analyses to identify factors associated with failure to enroll when eligible for either full or partial subsidies. Explanatory variables included sociodemographic characteristics, economic resources, work status, health variables, and source of prescription coverage (for nonsubsidized beneficiaries).

Results: In 2019, 73% of beneficiaries eligible for full subsidies under pre-Inflation Reduction Act LIS provisions were enrolled, compared with only 25% eligible for partial subsidies. The number of those estimated to be eligible for full subsidies but not enrolled (N = 3.9 million) was more than double that of those eligible but not enrolled for partial subsidies (N = 1.5 million). Factors associated with failure to enroll (older age, male sex, White race, married, higher education, higher income and assets, and excellent/very good health status) were similar for both groups. In multivariate analyses, the single strongest predictor of failure to enroll was receipt of income from work (odds ratio = 5.50; < 0.001). Among the nonenrolled, 64% eligible for full subsidies and 75% eligible for partial subsidies maintained unsubsidized Part D coverage.

Conclusions: Significant numbers of low-income Medicare beneficiaries are eligible for Part D subsidies but fail to enroll. Common characteristics distinguishing nonenrollees from enrollees include older age with higher proportions of White individuals, married individuals, higher income and assets, and better overall health. Two promising targets for increasing LIS enrollment are evidence of work income and unsubsidized Part D coverage.