Elder Law Answers Elder Law Answers

Search Articles

Find Attorneys

Study Finds Inequities in the Medicare Drug Plan Asset Test

  • June 15th, 2005

A study by the Kaiser Family Foundation questions the equity of the asset test for the new Medicare prescription drug benefit. According to the study, the asset test disproportionately prevents widows and widowers from getting help paying for low-income drugs.

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. To qualify for the subsidy, low-income beneficiaries must meet an income and asset test. Beneficiaries with income below 150 percent of the poverty level and assets that are less than $10,000 per individual or $20,000 per couple will receive help paying for prescription drugs under the new plan. Assets include stocks and bonds and savings and do not include a house, car, or personal possessions. For more information, click here.

The Kaiser Family Foundation report examined how many Medicare beneficiaries would qualify for the low-income subsidy; how many met the income test, but did not meet the asset test; and the characteristics of those who did not meet the asset test.

The study found that while nearly 14-million Medicare beneficiaries would qualify for the subsidy based on income alone (their income is below 150 percent of the poverty level), an estimated 2.37 million of those individuals are ineligible because of their assets. According to the study, 46 percent of the ineligible individuals are widows and widowers'”a disproportionately high number'”and 93 percent of those individuals are female. The study also found that even though the individuals had assets exceeding the asset test, they do not have extensive assets '“ half have excess assets of $35,000 or less, and 42 percent exceed the limit by $25,000 or less.

The study concludes that the low-income subsidy creates a "Catch-22." Individuals are encouraged to save for retirement, but if they have a modest savings, they won't qualify for help paying for prescription drugs.

To see the study, click here.

Local Elder Law Attorneys in Ashburn, VA

Jeffrey Hammond

Hammond and Associates, LLC, Elder Law, Estate Planning, Wills, Trusts, Probate
Bethesda, MD

Daniel Steven

Daniel N. Steven, LLC
Rockville, MD

Susan Pollack

Needham Mitnick & Pollack, PLC
Falls Church, VA


Last Modified: 06/15/2005

Learn More

View All Elder Law Topics Questions & Answers State Medicaid Information