Seniors pay hundreds—even thousands—of dollars each year for their prescription medications. Optional Medicare drug plans (Part D) and Medicare Advantage Plans (Part C) can help cover some of these costs, but formularies are constantly changing and these types of coverage can also involve additional out-of-pocket costs. While prescriptions may be more affordable with expanded drug coverage, premiums, deductibles, copayments and coinsurance can still add up quickly.
Fortunately, some seniors can enroll in Part D prescription drug coverage at reduced costs through the Medicare Extra Help program. Also known as LIS or the Part D low-income subsidy, Extra Help is a federal program that helps seniors with limited income and assets afford Part D coverage and their medications. According to the Social Security Administration (SSA), Extra Help is worth approximately $5,000 each year.
Do I Qualify for Extra Help With Medicare?
The Extra Help program is open to Medicare beneficiaries in all 50 states and the District of Columbia. Depending on a senior’s financial status, there are different Medicare Extra Help levels available.
For example, Medicare beneficiaries who already get full Medicaid coverage (dual eligibles), help paying for Medicare Part B premiums through a Medicare Savings Program, or Supplemental Security Income (SSI) benefits have already met very low income and asset limits. Therefore, these individuals automatically qualify for full Extra Help.
Individuals and couples who aren’t automatically eligible but have (albeit higher) limited income and assets may still qualify for the full low-income subsidy or even a partial subsidy. Those with lower income and fewer resources get the most financial assistance through this program (full Extra Help).
What Are the Resource Limits for Extra Help With Medicare?
The upper asset limits for Extra Help in 2021 are $14,790 for a single person and $29,520 for a married couple living together.
“Countable” resources include real estate other than one’s primary residence, bank accounts, cash, retirement accounts, and investments like stocks, bonds, and mutual funds. A beneficiary’s primary residence, one car, life insurance policies, a burial plot, property that is used for self-support (e.g. personal farm land or rental property), up to $1,500 put aside for burial expenses, and personal possessions do not count as resources.
What Are the Income Limits for Extra Help With Medicare?
In 2021, the highest annual Extra Help income limits are $19,140 for an individual or $25,860 for a married couple living together. However, some beneficiaries with income that exceeds these limits (e.g., those who have earnings from work or live in Alaska or Hawaii) may still be able to qualify for the program.
Not all cash payments a beneficiary receives count toward the Extra Help income limit. For example, Supplemental Nutrition Assistance Program (SNAP) benefits, housing assistance, home energy assistance, and assistance from others to help the beneficiary pay household expenses are not considered income.
Out-of-Pocket Costs With Extra Help
Premiums vary between Medicare Part D plans and depending on a beneficiary’s income. Extra Help pays the full cost of Part D premiums as long as the eligible beneficiary is enrolled in a plan with a premium at or below the specified benchmark amount for their state. The Medicare Rights Center has compiled a list of state-specific 2021 Extra Help premium amounts, which can be accessed here. According to the Centers for Medicare & Medicaid Services (CMS), the average basic Part D premium is $30.50 per month in 2021.
This may seem affordable, but remember that many of these plans feature a deductible that must be met before coverage kicks in. The highest deducible that a plan can charge in 2021 is $445. In addition to these costs, copayments and coinsurance for filling prescriptions can get very pricy for some seniors, especially those who take several medications and those who take drugs that fall into more expensive brand name and specialty tiers.
When it comes to premiums, deductibles, copayments and coinsurance, Extra Help puts a big dent in out-of-pocket (OOP) costs for both drug coverage and the costs of individual prescriptions. The 2021 costs are explained in detail below for each level of the program.
Partial Extra Help
Full Extra Help
Income-based sliding scale
$92 or the plan’s standard deductible (whichever is less)
Costs for Covered Generic Drugs
15% coinsurance or the plan’s copay (whichever is less); After $6,550 in OOP costs, $3.70 copay or 5% of the drug cost (whichever is greater)
Maximum $3.70 generic copay; No copay after $6,550 in OOP drug costs
Costs for Covered Brand Name Drugs
15% coinsurance or the plan’s copay (whichever is less); After $6,550 in OOP costs, $9.20 copay or 5% of the drug cost (whichever is greater)
Maximum $9.20 copay; No copay after $6,550 in OOP drug costs
Dual eligible (Medicare and Medicaid) beneficiaries who qualify for the Full Extra Help Program and have seriously limited income and assets benefit from even lower copays: $1.30 for generic drugs and $4.00 for brand-name drugs. The same waived copay applies for those who manage to meet the $6,550 OOP drug costs threshold for catastrophic coverage.
Some Medicare beneficiaries do not sign up for any kind of prescription drug coverage during their Initial Enrollment Period because they already have this coverage through an employer or do not take medications that would warrant purchasing additional coverage. However, if a senior goes without any kind of prescription drug coverage (Part C, Part D or other creditable coverage) for a continuous period of 63 days or more at any time after their initial enrollment opportunity ends, then they will owe a Part D late enrollment penalty that is based on their length of non-coverage. This permanent penalty is incorporated into a senior’s premium payments once they enroll in a Medicare Part D program. Fortunately, most seniors who qualify for Extra Help do not have to pay the late enrolment penalty.
How to Apply for Extra Help With Medicare
If you think you or someone you love may be eligible for Extra Help with their prescription drugs costs, then it’s important to apply. Applying online at www.SSA.gov/extrahelp is the easiest option. Medicare beneficiaries can also apply over the phone by calling 1-800-772-1213 or in person at a local Social Security office. Seniors who apply online also have the option to see if they are eligible for any Medicare Savings Programs that individual states offer to help with other Medicare costs.
Additionally, Medicare sends out notices via mail to beneficiaries about their new or ongoing eligibility for Extra Help. For example, in cases of automatic qualification, Medicare will send a yellow auto-enrollment notice and enroll the beneficiary in a Part D plan with the option to switch to another prescription drug plan of their choice. The income and asset requirements change each year, as do beneficiaries’ finances, so Extra Help is not a “set it and forget it” kind of government benefit. You can find out more about legitimate mail you get from Medicare, including Extra Help notices on Medicare.gov.
For assistance making decisions about Medicare coverage or finding and applying for benefits programs like Extra Help, contact your local Area Agency on Aging.