There has been a lot of debate in recent years about the high costs of prescription drugs for Americans. Nowhere has that been felt more than by those with limited resources and low incomes.
Responding to this ongoing problem, Medicare implemented the Extra Help Program under the Medicare Part D prescription drug program. It is also often referred to as the Low-Income Subsidy (LIS) for Part D.
Those who qualify can save a significant amount of money on drugs covered by Medicare.
Here’s what you need to know.
What does Medicare Extra Help Cover?
The Extra Help Program assists with coverage for your Medicare Part D prescription drug premiums, deductibles, coinsurance, and co-payments.
It can also eliminate your Part D late enrollment fee if you were going to be charged (People who waited too long to enroll in Part D may face up to a 10% premium increase).
When you qualify for Extra Help, you also qualify for a Special Enrollment Period. That means that you can make changes to your Medicare coverage once per quarter during the first three quarters of the year instead of having to wait until the Annual Enrollment Period.
What Does Medicare Extra Help Cover Inside the Medicare Donut Hole?
Most Medicare drug plans have a gap in coverage. This means there is a temporary limit on what the drug plan will cover for drugs. This is known as the donut hole. In 2020, that amount was $4,020 on prescription drugs.
Once you reach the donut hole gap, you’ll pay no more than 25% of the cost for your plan’s covered brand-name prescription and generic drug costs. You get this discounted whether you buy your prescriptions at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. Discounts are determined based on the price your plan has set with the pharmacy for that specific drug.
However, if you’re getting Extra Help program benefits, you won’t enter the coverage gap.
Who is Eligible for Extra Help from Medicare?
To qualify for Extra Help, a person must be receiving Medicare, have limited resources and income, and live in one of the 50 U.S. states or the District of Columbia.
Once you’re accepted, you’ll need to enroll in a Medicare Part D Prescription Drug plan. If you do not select a plan, one will be chosen for you. If you need help enrolling in a Part D plan, call 1-800-MEDICARE or go to Medicare’s website. You can also qualify if you have a Medicare Part C Plan that has prescription drug coverage.
In some cases, you may need to re-apply for Extra Help every year because your income and resource levels can change.
In 2020. your annual income must be less than $19,140 for an individual or $25,860 for a married couple living together. Your annual income can be higher than the eligibility limit, but for this you to occur, you must be supporting other family members who also live in the same household, or you live in Hawaii or Alaska.
If you don’t qualify for Extra Help now but think you might qualify soon, you can always re-apply at any time. It’s common for people to qualify at a later date when their amount of resources changes.
Annual Review of Extra Help Program Eligibility
In August or September, Social Security may send you a letter called the “Social Security Administration Review of Your Eligibility for Extra Help.”
This letter outlines your personal financial information that you provided when you applied and asks you to verify or update any changes. You have 30 days to respond. After Social Security reviews your response, they will send you a notice explaining if any changes to your Extra Help benefit have been made, including an increase, decrease or and end of benefits.
These letters are color-coded and can directly affect your benefits, so it’s important to open them and respond immediately if required. Each color focuses on a different issue and type of response:
- Purple: You automatically qualify for Medicare Extra Help because you receive Medicare and Medicaid, are enrolled in a Medicare Savings Programor receive SSI (Supplemental Security Income) benefits.
- Green: You are automatically enrolled in a Medicare Low Income Subsidy program because you receive SSI (Supplemental Security Income) benefits, are enrolled in a Medicare Savings Program, or you applied for Medicare Extra Help yourself.
- Yellow: You qualify for Medicare and Medicaid and are enrolled in Original Medicare. Medicare will enroll you in a prescription drug plan unless you purchase your own plan or choose to decline.
- Orange: You still qualify, but your copayments will change next year.
- Gray: You no longer qualify but are encouraged to apply for the following year.
- Blue: Your current drug plan is leaving Medicare or the premiums will no longer be fully covered by Extra Help. Be sure to look for a new plan.
- Tan: Extra Help participants are notified their current plan will now have a premium so they may want to shop for another drug insurance plan.
Appealing an Extra Help Program Decision
If your Extra Help benefits are denied or are less than you expected, you have the right to appeal the decision. You have 60 days from the date you received the Notice of Denial or Notice of Award to request a hearing. If you don’t want to attend a hearing, you can ask Social Security to review your application and any added information you send in instead.
Hearings are held by phone and after the fact, Social Security will send you a notice with the final decision. If you still disagree with the finding, you can file an appeal with a Federal District Court.
How to Apply for the Extra Help Program
There are several ways to apply for the Extra Help program:
By Mail: Print and mail in form SSA-1020.
By phone: Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778)
In-person: Visit your local Social Security Office
Online: Visit socialsecurity.gov/extrahelp
To apply online, you can complete an application if:
- You already have Medicare Part A and Medicare Part B insurance
- You live in one of the 50 U.S. states or the District of Columbia, and
- You meet income and asset limitations. Those limitations are:
- If you are married and living with your spouse, your combined savings, investments, and real estate are not worth more than $29,160.
Certain assets are excluded. You do not need to include your home, vehicles, personal possessions, life insurance, burial plots, irrevocable burial contracts or back payments from Social Security or SSI.
Even if you meet all of these qualifications you do not need to complete an application if you have Medicare and Supplemental Security Income (SSI), or Medicare and Medicaid, because you automatically will be enrolled in the Extra Help Program.
If you need help completing an application online, you can call Social Security at 1-800-772-1213 (TTY 1-800-325-0778).
What you Need to Complete Your Extra Help Application
To complete your application, you and your spouse may need to gather some paperwork, including:
- Social Security card
- Current bank account statements
- Credit union or other financial institution statements
- Proof of investments, stocks, or bonds (including book entry securities)
- Pension letters
- Life insurance or final expense insurance policies
- Tax returns
- Pay statements
- Driver’s license
- Birth certificate
- Other proof of citizenship and identity
- Your most recent Social Security benefits award letters or statements for Railroad Retirement benefits, pensions and annuities.
If you receive Medicaid, are enrolled in a Medicare Savings Program, or have any other government benefits (i.e., Social Security, Veterans’ benefits), you may need proof of that as well.
If you were automatically enrolled in Extra Help due to your Medicaid, SSI, or Medicare Savings Program benefits, and you still have those benefits, you will not have to re-enroll each year. If you applied by yourself because you do not have Medicaid, SSI, or an MSP but still qualify, you may have to re-apply.
You will receive a notice in the mail each Fall to let you know the status of your benefits beginning the following January 1. If you need to reapply to keep your Extra Help benefit, you’ll need to complete an application and submit it before the deadline.
Getting Assistance with Other Medicare Costs
You may be able to qualify for help with other Medicare costs under the Medicare Savings Programs. If you qualify, you may get help for Part A and Part B premium, copay and coinsurance costs through one of the four available options.
There are four Medicare Savings Programs:
Qualified Medicare Beneficiary (QMB) Program. Pays for Medicare Part A and Part B premiums and cost-sharing expenses. To qualify for this plan, you must be eligible, or currently enrolled in Medicare Part A.
Specified Low-Income Medicare Beneficiary (SLMB) Program. If you earn slightly more than the limit for the QMB program, then you may qualify for this program instead which helps with Medicare Part B premiums. This program does not pay other cost-sharing expenses.
Qualifying Individual (QI) Program. If you don’t qualify for QMB or the SLMB program, you can apply to this program. It helps with Part B premiums and automatically qualifies you for the Extra Help program. Funding is limited and benefits are available on a first-come, first-served basis.
Qualified Disabled and Working Individuals (QDWI) Program. This is different from the other three programs and only pays for Medicare Part A premiums.
Benefits vary by program, but all of them, except the QDWI Program help pay for Medicare Part B premiums.
Contact your state Medicare office or your State Health Insurance Counseling and Assistance Program (SHIP) for more details.
Have Medicare Questions? Need Help?
Not sure if you’re eligible? Have questions about the application process? Not sure how to get started?
Give us a call and we may be able to help.