Posted on 21 January 2010
By Mark Miller
A million low-income seniors have become eligible for a big assist on prescription drug expenses this year under a newly expanded federal program. The subsidy can defray thousands of dollars in costs, and in many cases eliminate prescription drug expenses entirely for participating seniors.
The Extra Help program–which is administered by the Social Security Administration–subsidizes Medicare Part D prescription drug premiums for eligible seniors. While the program isn’t new, eligibility rules have been changed this year in a way that expands its availability dramatically.
The government estimates the average annual benefit to Extra Help participants at $3,900. That should be welcome news for low-income seniors coping with soaring Part D premiums. Average monthly premiums jumped 11 percent for 2010, and they’ve risen 50 percent since 2006, according to the Kaiser Family Foundation.
Seniors are eligible for Extra Help if their income is no greater than $16,245 a year for singles, and $21,855 for married couples living together. The value of stocks, bonds and bank accounts can’t exceed $12,510 for singles and $25,010 for married couples. The income definition doesn’t include the value of homes or automobiles.
But there are two significant changes in eligibility rules this year. The cash value of life insurance policies is no longer counted as a resource, and assistance received from friends and relatives to pay for household expenses such as food or utilities also no longer are included. The Social Security Administration is urging anyone who didn’t meet the income standards in the past to re-apply.
The assistance helps with monthly premiums, any annual deductibles, co-insurance and co-payments. The program even plugs the notorious doughnut hole–the current coverage gap in Part D that starts when beneficiaries exceed $2,830 in total drug costs for the given year. At that point, the beneficiary pays 100 percent of costs up to $6,440, when so-called “catastrophic coverage” kicks in.
Unlike standard Part D enrollment–which occurs annually between Nov. 15 and Dec. 31–seniors can apply for Extra Help anytime during the year. But you’ll receive the maximum benefit if you’re in a Part D plan with a monthly premium below a certain benchmark monthly premium set by Medicare for each region of the country.
“If you enroll in one of these plans, you receive no bills and don’t have to pay up front and get reimbursed,” says Kelly Brantley, a senior program manager for Health Assistance Partnership, a non-profit Medicare education organization.
If you’re already enrolled in a Part D plan and enter the Extra Help program, you’ll be informed whether your premium is entirely covered, or that you need to pay the difference between the premium and the benchmark amount. However, you also have the right to change to a different plan at any time.
Low-income seniors who aren’t already enrolled in a Part D plan should apply for the Extra Help subsidy, and simultaneously enroll in a drug plan. “If you are eligible, the benefit is retroactive to the first day of the month when you apply,” Brantley explains.
If you’re switching plans or enrolling in Part D for the first time, use the Medicare website’s plan finder to select a plan that maximizes your Extra Help benefit. You’ll input data about your specific prescriptions and some other personal data; the tool will take into account the expected subsidy when it presents Part D plan options to you. You’ll be looking for the plan with the fewest restrictions on your specific prescriptions, and one that works with a pharmacy you want to use. To learn more about shopping for plans, visit our page on how to shop for Medicare plans.
You can also get free counseling and assistance in selecting a plan from your local State Health Insurance Assistance Program (SHIP), a government-sponsored counseling service for Medicare beneficiaries. To find the SHIP near you, visit http://www.hapnetwork.org/ship-locator/.
To apply for Extra Help, visit this page a the Social Security Administration website, call Social Security at 1-800-772-1213 or visit your local Social Security office.