Extra Help for Low-Income
Medicare Beneficiaries

 

Introduction

There is substantial help available to low-income Medicare beneficiaries enrolled in a Medicare drug plan.

• Several levels of subsidies are available to help with the costs of obtaining prescription drugs through a Medicare drug plan. These costs include an annual deductible, monthly premiums, and co-payments or coinsurance amounts for each prescription.
• The amount beneficiaries will pay for their prescription drugs depends upon the subsidy level that they qualify for based on their countable income and assets.
• There are special rules for some low-income nursing home residents.

Help is available to Medicare beneficiaries whose:

• countable resources (sometimes called assets) are at or below $11,990 for an individual and $23,970 for a married couple, and
• countable income is below 150% of the federal poverty level (FPL).
  • In 2008, 150 percent of the FPL for a single person is $1,300 (1) per month and for a married couple it is $1,750 (1) per month (in the 48 contiguous states and the District of Columbia). FPL for residents of Alaska and Hawaii as well as beneficiaries with dependents are available at 2008 Federal Poverty Levels.

Levels of Low-Income Subsidies

A.  Fully Dually-Entitled Beneficiaries on Full Medicaid With Incomes No More Than 100% of the Federal Poverty Level: Medicare beneficiaries residing in the community who are also receiving full Medicaid benefits and whose income is no more than 100 percent of the Federal Poverty Level (FPL).

In 2008, 100 percent of the FPL is $866.67 (1) per month for an individual and $1,166.67 (1) per month for a married couple in the 48 contiguous states and the District of Columbia. Full duals who meet these income requirements receive the following subsidies.

• Beneficiaries in this group do not pay a monthly premium,
  • but only if they choose a standard plan that has a premium below the regional average benchmark. (2) CMS sends notification to new full duals telling them which plan they have been assigned for auto enrollment.
    • Beneficiaries who choose to enroll in a plan that has a premium that is more expensive than the average regional benchmark still receive a premium subsidy, but they must pay the balance out-of-pocket.
    • Beneficiaries who choose to enroll in a plan that has a premium that is less expensive than the average premium in their region get the premium subsidy and their monthly premium will be paid.  They will not get any windfall from enrolling in a plan with a lower premium.
• Beneficiaries in this group do not pay any annual deductible.
• Beneficiaries in this group pay only a co-payment of $1.05 per each generic or preferred brand drug or $3.10 per prescription for all other drugs until the beneficiary has spent $4,050 out-of-pocket. This total is also known as the catastrophic limit. Only "true" out-of-pocket (TrOOP) costs count towards the catastrophic limit (see Table 1).
• After beneficiaries in this group reach the catastrophic limit, their prescription drugs are free.

B.  Fully Dually-Entitled Beneficiaries on Full Medicaid With Incomes Above 100% of the Federal Poverty Level:  Medicare beneficiaries residing in the community who are also receiving full Medicaid benefits and whose income is above 100 percent of the Federal Poverty Level (FPL). 

In 2008, 100 percent of the FPL is $866.67 (1) per month for an individual and $1,166.67 (1) per month for a married couple in the 48 contiguous states and the District of Columbia. Full duals with incomes above these income amounts receive the following subsidies.

• Beneficiaries in this group do not pay a monthly premium to the Medicare drug benefit plan,
  • but only if they choose a standard plan that has a premium that is below the regional average benchmark. (2) CMS sends notification to new full duals telling them which plan they have been assigned for auto enrollment.
    • Beneficiaries who choose to enroll in a plan that has a premium that is more expensive than the average regional benchmark still receive a premium subsidy, but they must pay the balance out-of-pocket.
    • Beneficiaries who choose to enroll in a plan that has a premium that is less expensive than the average premium in their region get the premium subsidy and their monthly premium will be paid. They will not get any windfall from enrolling in a plan with a lower premium.
• Beneficiaries in this group do not pay any annual deductible.
• Beneficiaries in this group pay only a co-payment of $2.25 per each generic or preferred brand drug or $5.60 per prescription for all other drugs until the beneficiary has spent $4,050 out-of-pocket. This total is also known as the catastrophic limit. Only "true" out-of-pocket (TrOOP) costs count towards the catastrophic limit (see Table 1).
• After beneficiaries in this group reach the catastrophic limit, their prescription drugs are free.

C.  Any Fully Dually-Entitled Beneficiary Residing in a Nursing Facility or a Skilled Nursing Facility: Regardless of their income, Medicare beneficiaries who receive full Medicaid benefits and reside in a NF or a SNF receive the maximum subsidies. Beneficiaries in this group do not pay any monthly premiums to the private plan offering the Medicare prescription drug benefit; they do not pay the annual deductible nor do they have any co-payments or co-insurance amounts for their prescriptions. However, if their care is covered by the Medicare Part A skilled nursing facility benefit, their prescription drugs will be covered by Medicare Part A. 

D.  Medicare Beneficiaries With Income Less than 135% of Federal Poverty Level (Not Entitled to Full Medicad Benefits): This income group includes Medicare beneficiaries entitled to help with their regular Medicare cost-sharing requirements through the Medicare Savings Programs (MSPs)-- the Qualified Medicare Beneficiaries (QMBs), Specified Low-Income Beneficiaries (SLMBs), and Qualifying Individuals (QIs). These beneficiaries are often referred to as partial dual-eligibles. This income group will include Medicare beneficiaries who are SSI recipients but do not automatically receive full Medicaid benefits upon receipt of SSI. Remember, this income group does not include full dually entitled beneficiaries with incomes in this range; they are included in the group described in point B above.

In 2008, incomes of less than 135 percent of the FPL in the 48 contiguous states and the District of Columbia range from:

• less than $1,170 (1) per month for a single person, and
• less than $1,575 (1) per month for a married couple.

There are two levels of subsidies available for beneficiaries within this income range depending upon the amount of countable resources they own.

1. Beneficiaries with Fewer Resources: Beneficiaries in this income group with countable resources (assets) of less than $7,790 for an individual or less than $12,440 for a married couple.

• Beneficiaries in this group do not pay a monthly premium to the Medicare drug benefit plan,
  • but only if they choose a standard plan that has a premium that is below the regional average benchmark. (2) 
    • Beneficiaries who choose to enroll in a plan that has a premium that is more expensive than the average regional benchmark still receive a premium subsidy, but they must pay the balance out-of-pocket.
    • Beneficiaries who choose to enroll in a plan that has a premium that is less expensive than the average premium in their region get the premium subsidy and their monthly premium will be paid. They will not get any windfall from enrolling in a plan with a lower premium.
• Beneficiaries in this group do not pay any annual deductible.
• Beneficiaries in this group pay only a co-payment of $2.25 per each generic or preferred brand drug or $5.60 per prescription for all other drugs until the beneficiary has spent $4,050 out-of-pocket, also known as the catastrophic limit. Only "true" out-of-pocket (TrOOP) costs count towards the catastrophic limit (see Table 1).
• After beneficiaries in this group reach the catastrophic limit, their prescription drugs are free.

2. Beneficiaries with Higher Resources: Beneficiaries in this income group with countable resources (assets) between $7,790 and $11,990 for an individual or between $12,440 and $23,970 for a married couple.

• Beneficiaries in this group do not pay a monthly premium to the Medicare drug benefit plan,
  • but only if they choose a standard plan that has a premium that is below the regional average benchmark. (2)
    • Beneficiaries who choose to enroll in a plan that has a premium that is more expensive than the average regional benchmark still receive a premium subsidy, but they must pay the balance out-of-pocket.
    • Beneficiaries who choose to enroll in a plan that has a premium that is less expensive than the average premium in their region get the premium subsidy and their monthly premium will be paid. They will not get any windfall from enrolling in a plan with a lower premium.
• Beneficiaries in this group pay a $56 annual deductible.
• Beneficiaries in this group pay a 15 percent coinsurance per prescription for all drugs until the beneficiary has spent $4,050 out-of-pocket, also known as the catastrophic limit. Only "true" out-of-pocket (TrOOP) costs count towards the catastrophic limit (see Table 1). 
• After beneficiaries in this group reach the catastrophic limit, they pay $2.25 per each generic or preferred brand drug or $5.60 per prescription for all other drugs.

E.  Medicare Beneficiaries With Incomes between 135% and 150% of Federal Poverty Level: Beneficiaries whose countable income is at or above 135 percent of the FPL but below 150 percent of the FPL and who have countable resources (assets) of no more than $11,990 for an individual or no more than $23,970 for a married couple.

In 2008, incomes of 135 percent or more of the FPL but less than 150 percent of the FPL in the 48 contiguous states and the District of Columbia range from:

• $1,170 (1) or more but less than $1,300 (1) per month for a single person, and
• $1,575 (1) or more but less than $1,750 (1) per month for a married couple.

The following are the cost-sharing amounts for beneficiaries in this income group with assets of no more than $11,990 for an individual or no more than $23,970 for a couple.

• Beneficiaries in this group pay a portion of the monthly premium to the Medicare drug benefit plan based on their income.
  • Individuals with incomes between 135 percent FPL and 140 percent FPL (see Table 2) will receive a premium subsidy equal to 75 percent of the regional average benchmark.
  • Individuals with incomes between 140 percent FPL and 145 percent FPL (see Table 2) will receive a premium subsidy equal to 50 percent of the regional average benchmark.
  • Individuals with incomes between 145 percent FPL and 150 percent FPL (see Table 2) will receive a premium subsidy equal to 25 percent of the regional average benchmark.
• Beneficiaries in this group pay a $56 annual deductible.
• Beneficiaries in this group pay a 15 percent coinsurance per prescription for all drugs until the beneficiary has spent $4,050 out-of-pocket, also known as the catastrophic limit. Only "true" out-of-pocket (TrOOP) costs count towards the catastrophic limit (see Table 1).
• After beneficiaries in this group reach the catastrophic limit, they pay $2.25 per each generic or preferred brand drug or $5.60 per prescription for all other drugs.

---

1 This income amount does not take into account any income exclusions or disregards. All asset levels include amounts designated as a burial funds.

2 For the purposes of this document, we are using the term "average" to describe the amount of subsidy that a beneficiary will receive. The amount of subsidy is based on a weighted average derived from a complex formula that goes beyond the scope of this document.

---

Table 1. What Is True Out-of-Pocket (TrOOP)?

True Out-of-Pocket Costs Include: Beneficiaries' out-of-pocket expenses including the annual deductible and any co-insurance amounts (including 100% of the cost of the prescription while in the "doughnut hole") Beneficiary spending using health savings accounts (HSAs), flexible spending accounts (FSAs), and medical savings accounts (MSAs) Contributions from friends or relatives Contributions from certain charitable foundations Co-payments or coinsurance paid to drug manufacturer patient assistance programs (PAPs) Waivers or reductions by pharmacies of the cost-sharing requirements of Medicare drug benefit plans Payments by state-funded only programs such as state pharmacy assistance programs (SPAPs)

True Out-of-Pocket Costs Do Not Include: Monthly premiums paid to the Part D plan Any amount paid by other insurance plans Any amount paid by state programs that receive federal funding such as Aids Drug Assistance Programs (ADAPs) Any amount spent for prescription drugs that are not covered by the Medicare drug benefit plan

Table 2. 2008 Federal Poverty Guidelines Monthly Income Levels

	Single	Married
Between 135% and 140% FPL	$1,170 to $1,213.33	$1,575 to $1,633.33
Between 140% and 145% FPL	$1,213.33 to $1,256.67	$1,633.33 to $1,691.67
Between 145% and 150% FPL	$1,256.67 to $1,300	$1,691.67 to $1,750