Senate Finance Committee Members Introduce Bill to Reduce Medicare Out-of-Pocket Costs, Improve Access to Medicare Savings Programs

Last month, U.S. Senator Lisa Blunt Rochester, Senate Finance Committee Ranking Member Ron Wyden, Senate Democratic Leader Chuck Schumer, along with 13 additional co-sponsors, introduced the Medicare Cost Cap Act. The bill would create, for the first time, an out-of-pocket cap on Medicare beneficiary cost sharing in Original Medicare.

The Need for a Medicare Cost Cap

Beneficiaries who elect Medicare Advantage coverage have protection against annual cost sharing above certain thresholds. The same is true for people with employer-sponsored and Marketplace coverage, but people with Original Medicare face potentially unlimited costs unless they purchase additional supplemental insurance like Medigaps or are eligible for Medicaid. This can spur many people to choose Medicare Advantage.

People with Original Medicare face potentially unlimited costs unless they purchase additional supplemental insurance.

A cap on out-of-pocket expenses in Original Medicare would guarantee protections from unlimited cost-sharing, help address beneficiary affordability challenges, and level the playing field between Original Medicare and Medicare Advantage, better ensuring that beneficiaries have a real choice in how they access their Medicare benefits.

The Bill Would Ease MSP Access

The bill would also strengthen and enhance programs that help lower income Medicare beneficiaries afford their Medicare premiums.

The Medicare Savings Programs (MSPs) are essential—but many eligible individuals are not enrolled, and many older adults and people with disabilities with tight budgets are ineligible for assistance because of modest savings or excess income.

The bill would make significant improvements to MSPs.

Consistent with our experience in New York and Medicare Rights Center’s longstanding policy recommendations, the bill would make significant improvements to MSPs. It would align eligibility criteria across Medicare cost-sharing programs and increase the income threshold to 200% of poverty ($31,300 for an individual in 2026). Increasing the stringent income eligibility limits across all states would help more older adults and people with disabilities living on limited incomes afford their premiums, cost-sharing, and care. It would also eliminate the asset test—reducing administrative burdens on both applicants and application-reviewers and encouraging, rather than penalizing, saving among those with limited incomes.

It also aligns income counting rules with the assistance program for Medicare prescription drugs, simplifying application processes, and establishes automatic enrollment for people who have already been approved for other Medicare low income supports.

The Medicare Rights Center Supports Modernizing MSP Access

Boosting MSP uptake is a longstanding goal of the Medicare Rights Center. To make it clear what a difference this assistance can have in the lives of older adults and people with disabilities, and to support advocacy efforts to expand MSP eligibility and enrollment, in 2025 we compiled a set of case studies from our national helpline. Those real-world experiences highlight the obstacles beneficiaries commonly face when trying to get and keep an MSP and underscore the importance of the program.

Boosting MSP uptake is a longstanding goal of the Medicare Rights Center.

We also have a long history of identifying state level interventions to ease MSP access. In New York, we advocated for an MSP eligibility expansion that is helping nearly 300,000 more New Yorkers get these vital benefits. We also worked to advance legislation automating MSP enrollment for people with Extra Help, using information already on file with SSA. This modernized approach reduces entry barriers for New Yorkers and administrative burdens on state agencies, making the system more efficient and equitable.

At the federal level, we have also supported simplification efforts, including rulemaking to streamline MSP enrollment nationally. These changes were initially estimated to increase MSP uptake by at least 860,000, but were blocked by the 2025 reconciliation bill, HR 1, to reduce the bill’s costs and pay for other priorities.

There is also a very real human cost to anemic and curtailed MSP enrollment.

The Congressional Budget Office (CBO) projects nearly 1.4 million low-income people with Medicare will lose MSP and Extra Help as a result. While CBO’s report anticipates this will yield $162 billion in savings, their analysis does not include important realities likely to undercut those amounts: Research demonstrates that when beneficiaries cannot afford care, they delay or skip important treatment, driving up health needs and spending in the long run.

There is also a very real human cost to anemic and curtailed MSP enrollment. A 2025 study in the New England Journal of Medicine links losing Medicare cost assistance with significant increases in mortality. Its authors issued a memo applying that research to HR 1’s MSP streamlining rule delay, warning it “could result in 18,200 additional deaths among Medicare enrollees every year.”

Looking ahead, we will continue to advocate for MSP reforms across the country, including by restoring and building upon these changes.