The Medicare Cliff explained

Health Line

2 days ago

Sometimes, you can lose Medicaid coverage at age 65 as you become eligible for Medicare. This is called the Medicare cliff and can lead to changes to your benefits and coverage, as well as higher costs.
In the United States, there are two government health insurance programs: Medicare and Medicaid. Usually, you become eligible for Medicare when you turn 65 years old. Medicaid eligibility, on the other hand, is determined by your income.
Older adults with limited incomes who are on Medicaid can also become eligible for Medicare based on Medicare's eligibility criteria. In some cases, however, you may lose your Medicaid benefits once you become eligible for Medicare. This is called the 'Medicare cliff.'
Read to learn about the Medicare cliff, its potential impact on your coverage and costs, and how you might manage its effect.
What is the Medicare CLIFF?
The Affordable Care Act (ACA) has generally expanded Medicaid coverage to people whose incomes are below 138% of the federal poverty level in most states.
Most U.S. states have implemented this expansion. In all U.S. states except Alaska and Hawaii, this is equivalent to an annual income of $21,597 for an individual, or higher, depending on family size.
But, the ACA's Medicaid expansion doesn't apply to people over 65, which means Medicaid eligibility criteria become more stringent once you turn 65. At this point, your income must be around 100% of the FPL, or $15,650 per individual, or even lower, depending on the state.
Although it is possible to be eligible for both Medicare and Medicaid, the 'Medicare cliff' happens when you lose eligibility for Medicaid coverage when you turn 65, forcing you to transition to Medicare coverage only.
Since Medicare's coverage structure and costs are different from those of Medicaid, transitioning from Medicaid to Medicare may lead to more out-of-pocket spending and sometimes less comprehensive coverage and benefits.
What is the impact of the Medicare CLIFF?
When you change from Medicaid to Medicare, you may face higher costs because Medicare has higher premiums, deductibles, copayments, and coinsurance than Medicaid.
Original Medicare (Part A and Part B) has particular costs that vary significantly from the costs of Medicaid. In 2025, if you pay for Medicare Part A, your premium is either $285 or $518, depending on your income, and your deductible is $1,676.
Once coverage begins, Part A covers full hospitalization for the first 60 days, after which additional daily costs apply. For Medicare Part B, the premium is $185 monthly, depending on income, with a $257 deductible, after which you cover 20% of the cost of your care.
On the other hand, Medicaid generally caps your out-of-pocket costs to no more than 5% of your family income. In many states, if your income is at or below 150% of the FPL (an income of $23,475 per individual), you also won't pay a premium. Also, if you fall into certain groups, you're entirely exempt from most out-of-pocket expenses, and some services, like emergency and preventive care, are entirely free.
In terms of coverage differences, Medicare doesn't cover long-term care expenses, whereas Medicaid does. Medicare also doesn't cover benefits like dental, vision, or hearing costs.
However, if you choose to enroll in Medicare Advantage (Part C) instead of Original Medicare, you may get these additional benefits, but you'll also have premiums, deductibles, and coinsurance. These will depend on your specific plan and may also be higher than your previous Medicaid costs. This is the same with Medicare Part D, which covers prescription drugs.
Who is impacted by the Medicare CLIFF?
Only about 1 in 10 people ages 65 and older, or 5.9 million people in the United States, have incomes below 100% of the FPL. Anyone whose income exceeds this threshold could lose their Medicaid coverage when they become eligible for Medicare.
That said, people who earn above 100% of the FPL don't necessarily earn a lot and don't necessarily find it easy to afford out-of-pocket medical expenses. In addition, the Medicare cliff disproportionally affects females assigned at birth (FAAB) and People of Color.
Broader impact of the Medicare cliff
Based on a 2025 data analysis of the Medical Expenditure Panel Survey and the National Health and Nutrition Examination Survey from 2007 to 2019, researchers found that the Medicare cliff can lead to as much as a 25% increase in out-of-pocket spending on healthcare. It also increases your likelihood of difficulty paying medical bills by as much as 44.4%.
In addition, a 2023 study also found that losing Medicaid as a result of the Medicare cliff significantly reduced enrollment and healthcare utilization for Black and Hispanic people, making it harder to access medical care due to higher costs, as compared to people who are white.
How do I avoid the Medicare CLIFF?
There isn't necessarily a way to avoid the Medicare cliff entirely, unless the ACA's Medicare expansion is expanded further to people over age 66. That said, under certain circumstances, you might be able to retain some Medicaid coverage or receive financial support for your higher Medicare costs. These include:
Medicare Savings Programs (MSPs): Qualifying for one of the four MSPs can help you cover your Medicare Part A and Part B premiums. Depending on the program, you might also retain some Medicaid benefits or have Medicaid cover part of your Medicare costs.
Medicaid for aged, blind, and disabled people (ABD Medicaid): If you qualify, you may be able to enroll in additional Medicaid programs, such as ABD Medicaid, for which you may still qualify once you turn 65.
Social Security Disability Insurance (SSDI): You can also qualify for Medicaid if you receive SSDI. Depending on your state, the FPL limit for qualifying based on disability could be different than the standard limit at age 65, allowing you to stay on Medicaid.
In addition, if you are losing your Medicaid and transitioning to Medicare, there are other things you can do to help you manage increased out-of-pocket costs. These include:
Extra Help: This program, also called the Part D Low-Income Subsidy, offers financial assistance for prescription medications based on your income. Under Medicare, you may qualify for Extra Help even if you no longer qualify for Medicaid.
State Pharmaceutical Assistance Program (SPAP): Some states may offe r SPAP, which is a program that can also help you pay for the cost of prescription drugs and Medicare Part D premiums.
Medigap: Medicare supplement plans, also called Medigap, can help you cover out-of-pocket costs remaining after your Original Medicare benefits kick in. These plans also come with a premium, but they can save you money on deductibles, copayments, and coinsurance. Whether Medigap is right for you depends on your budget and specific health needs.
Takeaway
Under the ACA, Medicaid expansion covers many adults until age 65. After this, stricter state-specific eligibility rules take effect, often leading to loss of coverage around the time you qualify for Medicare.
When you switch to Medicare from Medicaid, you can encounter higher costs and different benefits compared to Medicaid, which can pose both financial and health-based challenges.
This situation is referred to as the Medicare cliff, which tends to affect more FAABs and people living with at least two chronic conditions. It may also create more challenges for people from certain historically marginalized groups.