NY missed out on nearly $500 million by not switching seniors to Medicare

The state comptroller’s office found that the state Department of Health missed out on nearly half a billion dollars in savings because Medicaid patients weren’t enrolled in Medicare once they reached 65. The missed opportunity comes as the state health care budget is in for a reckoning due to cuts in federal funding.

The comptroller's office followed up on a 2021 audit looking at Medicaid enrollment levels among seniors who were eligible for Medicare. New York’s eligibility system is supposed to automatically switch the initial burden of payment from Medicaid to Medicare once a patient turns 65 and is enrolled in the federal program, but the New York State of Health marketplace, a growing entry point for Medicaid, does not always guarantee the transfer. The automatic switch was paused in 2020 to prevent coverage lapses during the pandemic. 

Once it resumed in 2023, DOH had county departments of social services resume checks on patients over 65 years old; however, the marketplace hadn’t fully resumed. The state comptroller’s office flagged 13,318 seniors as eligible for Medicare in 2023, but only 2,648 have been moved to Medicare in 2025.

Keeping seniors on state Medicaid plans even though they are eligible for Medicare coverage costs New York money. That’s because Medicaid coverage costs come out of the state budget, while the federal government pays directly for Medicare coverage. The comptroller’s report said the state missed out on approximately $485 million in savings dating back to 2016 as a result of failing to enroll eligible seniors in Medicare. 

“DOH should provide clear guidance to county social services offices to help eligible seniors enroll in Medicare,” state Comptroller Thomas DiNapoli said in a statement. “Until that happens, New York will keep making Medicaid payments for care Medicare should cover, and taxpayers will keep footing the bill.”

In a letter to the department, the state Comptroller’s office evaluated the progress that was made following the office’s earlier audit of the issue in 2021. It found that the comptroller’s recommendations that it resume Medicare enrollment were partially implemented, with districts outside of New York City resuming the practice in 2023 and New York City doing the same in 2025. DOH also fully implemented recommendations that it perform a cost-benefit analysis on periodically identifying Medicare-eligible seniors and referring them to social services for a determination, finding it wouldn‘t be cost-effective. A recommendation that DOH identify and implement procedures to make sure that correct information is collected and eligible patients are asked to enroll in Medicare was not followed, with the comptroller’s office finding that in a sample of 111 eligible but not enrolled Medicare recipients, 76% were not asked to enroll in Medicare, because local social services departments lacked the records that showed they were eligible for Medicare.

In response to the new audit, DOH directed City & State back to its response to the previous audit, which emphasized the minuscule scale of potential savings and the effect the pandemic had on processing data. 

To DOH’s point, the state only missed out on roughly $50 million per year on average – a drop in the bucket compared to the $109.6 billion that the state allocated for Medicaid costs in the 2025-2026 fiscal year. But with the federal government set to reduce funding for Medicaid and Medicare, every penny counts.