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Get Help Paying for the New Medicare Prescription Drug Benefit

  • June 15th, 2005

This article is out of date. For updated information, click here and scroll down to "Subsidies for low-income beneficiaries."

The countdown to the new Medicare prescription drug benefit has begun. In January 2006, Medicare will begin providing coverage for outpatient prescription drugs under a new Part D. A low-income subsidy is available to help pay the premiums, deductibles, co-payments and coverage gap of the new drug benefit. A Kaiser Family Foundation study found that Medicare beneficiaries who receive the low-income assistance will pay on average 83 percent less for prescription drugs in 2006 than they otherwise would have. The amount of the subsidy varies depending on income.

If you meet one of the following criteria, you will not need to pay any premiums, deductibles, or coverage gap (there is no Medicare coverage for drug costs between $2,250 and $5,100):

  • You have full Medicaid and Medicare (you are a "dual eligible").
  • You are enrolled in Medicare Savings Programs (MSPs).
  • You get Supplemental Security Income (SSI).
  • Your income is below 135 percent of federal poverty level (FPL) and your assets (assets do not include your home, car, and personal possessions) are not more than $6,000 per individual or $9,000 per couple.

Co-payments will be $1 or $2 for generic and preferred drugs and $3 or $5 for other drugs, depending on the participant's income.

If your income is below 150 percent of the poverty level ($14,355 a year for individuals and $19,245 a year for couples in 2005) and you have less than $11,500 per individual or $23,000 per couple in assets, you may receive a partial subsidy. You will pay a sliding scale premium; a $50 deductible; and 15 percent per prescription up to $5,100, then $2 for generic and preferred drugs, and $5 for brand drugs. There is no coverage gap.

The SSA has an online tool that will help you determine whether you qualify for the subsidy or not.

IMPORTANT NOTICE: Medicare will not pay low-income beneficiaries' premiums for all drug plans, but only those plans that have a premium at or below the "regional benchmark." This is contrary to what was published in the print version of Medicare's booklet, "Medicare & You 2006," which indicated that the premium of any plan would be covered. In fact, for about 60 percent of the prescription drug plans listed in the handbook, a low-income beneficiary would have to pay some of the plan's premium. The electronic version of the handbook is accurate.

If you are dual eligible, enrolled in MSPs, or get SSI, you do not need to apply for the subsidy. The Centers for Medicare & Medicaid Services (CMS) has begun sending out mailings to individuals who automatically qualify for the benefit, letting them know that they do not need to apply. Other individuals will have to fill out an application in order to see if they qualify for the subsidy. Click here for information on what you need for the application. The Social Security Administration (SSA) is mailing applications to beneficiaries. If you do not receive one, you can call 1-800-772-1213 and have an application mailed to you. Beginning July 1, 2005, you will be able to apply online at http://www.socialsecurity.gov/prescriptionhelp.

The SSA will begin processing applications in July. After they review your application, you will receive a letter telling you if you qualify. In early fall, the CMS will provide information on the types of drug plans that will be available. You can enroll in a drug plan between November 15, 2005 and May 15, 2006. If you enroll after May 15, 2006, your premiums may be higher.

Have more questions about the low-income assistance? See Section IV, "Can I Get Extra Help Paying the Medicare Drug Benefit if My Income is Low?," in the Medicare Rights Center's online Medicare Drug Coverage 101.

See also "Study Finds Inequities in the Medicare Drug Plan Asset Test," ElderLawAnswers News, June 15, 2005).

Local Elder Law Attorneys in Ashburn, VA

Mindy Felinton

Felinton Elder Law & Estate Planning Centers
Rockville, MD

Samantha Fredieu

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Margaret O'Reilly

Margaret A. O'Reilly, PC
Herndon, VA


Last Modified: 06/15/2005

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