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Understanding the Low-Income Subsidy for Medicare Part D (Extra Help)

If you’re a Medicare beneficiary with a limited income and resources, you might be eligible for the Low-Income Subsidy (LIS) program (also called “Extra Help”) program for Medicare prescription drug coverage (Part D). But how does it work exactly, and who qualifies for it?

In this article, we’ll dive into the details of the Low-Income Subsidy program, including eligibility requirements, how to apply, and what benefits you may receive. So, let’s get started!

What is Extra Help for Medicare Prescription Drugs?

Extra Help for Prescription Drugs is a program that assists individuals with limited income and resources to pay for Medicare prescription drug coverage (Medicare Part D). The program covers expenses related to prescription drug plans, including monthly premiums, annual deductibles, and prescription co-payments. 

The Social Security Administration (SSA) estimates that Extra Help is valued at around $5,300 per year, making it a significant cost-saving option. Despite its benefits, many eligible individuals are unaware of this program.

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Eligibility for Extra Help Program

This program, also known as Extra Help, can provide financial assistance with monthly premiums, annual deductibles, and prescription co-payments. But how do you know if you’re eligible for the LIS program? 

Some things need to consider to be eligible:

Resource Income and asset limits

You must have an income below a certain threshold and limited resources. In 2023, you can qualify for Extra Help if your annual income is below $21,870*, and $29,580* for married couples living together. However, certain circumstances may allow higher-income individuals to be eligible for assistance.

Examples of resources include the value of the things you own, including:

  • Real estate assets
  • Bank accounts, such as checking, savings, and certificates of deposit.
  • Stocks
  • Bonds, including U.S. Savings Bonds
  • Mutual funds
  • Individual Retirement Accounts (IRAs)
  • Cash holdings at home or elsewhere 

Otherwise, your primary residence, car, and personal belongings do not count toward these limits. The Social Security Administration (SSA) can provide information on other exclusions.

Qualification through Medicaid

To qualify for Medicaid, you typically need to have a low income, but the exact limits vary depending on your household size and other factors. Medicaid also considers other factors such as age, disability, and pregnancy status when determining eligibility.

If you think you may be eligible for Medicaid, you can apply through your state’s Medicaid agency or through the Health Insurance Marketplace. The application process may involve providing documentation of your income, assets, and other personal information.

Automatic enrollment for dual-eligible beneficiaries

Suppose you’re enrolled in both Medicare and Medi-Cal (Medicaid in California). In that case, you’ll be automatically enrolled in the Low-Income Subsidy program for Medicare Part D. This means you won’t need to apply separately for the subsidy.

Upon becoming eligible for Medicare Part D, if you have not yet chosen a plan for prescription drug coverage, you will be automatically enrolled in a Medicare Part D plan. Medicare will send you two separate letters, one notifying you of your automatic enrollment in LIS and the other explaining the details of your automatic enrollment in the prescription drug coverage.

Applying for Medicare Extra Help

Applying for Extra Help is free of cost. In case you are not eligible upon your initial application, you can reapply for Extra Help at any time if there are changes in your income and/or resources.

There are various methods to apply:

  1. Apply online at Social Security Administration, which can be filled out electronically or printed and mailed to the SSA office. The website provides instructions in multiple languages.
  2. You can apply by phone, mail a paper application, or schedule an appointment at your local SSA office by calling 1-800-772-1213 (TTY users can call 1-800-325-0778).

  3. You can also apply through the State Medical Assistance (Medicaid) office by visiting HERE to obtain the contact information for the state office or by calling 1-800-MEDICARE (1-800-633-4227) and stating “Medicaid” to obtain the telephone number (TTY users should call 1-877-486-2048).

  4. You can apply in person by visiting your local Social Security office.

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The SSA will verify the financial information you provide on your Extra Help application with the Internal Revenue Service (IRS).

If you reside in Southern California and need assistance, please do not hesitate to get in touch or schedule an appointment with me. Also, if you’re unsure about your eligibility, contact the Social Security Administration or use my Medicare Plan Finder tool.

Benefits of Medicare’s Part D Low-Income Subsidy

Here are some of the benefits of the Part D LIS/Extra Help program:

Reduced monthly premiums

LIS can significantly reduce the monthly premium you pay for your Medicare Part D plan, making it more affordable and accessible for those who are struggling to pay for their health care

Lower deductibles and copayments

Besides reduced premiums, the LIS program also helps reduce or eliminate the out-of-pocket expenses you pay for your prescription drugs. 

No coverage gap (the “donut hole”)

Medicare Part D has a coverage gap, where beneficiaries are responsible for paying a larger share of their prescription drug costs. However, with the LIS program, beneficiaries are exempt from the coverage gap and receive continuous coverage throughout the year.

Automatic enrollment

If you qualify for LIS, you will be automatically enrolled in a Medicare Part D plan without needing to select a plan yourself. This helps to simplify the enrollment process and ensure that you receive the necessary prescription drug coverage.

Special Enrollment Period (SEP)

Once per calendar quarter within the first nine months of the year, enabling you to enroll in a Part D plan or switch between plans. However, it is important to note that the Extra Help SEP cannot be utilized during the fourth calendar quarter (October through December). Instead, the Fall Open Enrollment should be utilized to make any prescription drug coverage changes.

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Eliminates late enrollment penalty

Extra Help Program eliminates any late enrollment penalty for Part D that you may have incurred due to delayed enrollment in Part D.

Your eligibility for full or partial Extra Help depends on your income and assets. Both programs can assist you in covering the cost of your medications. However, to receive this assistance, it is important that your prescriptions are included in your plan’s formulary and you use pharmacies within your plan’s network.

Final Thought

It is important to note that not all Medicare beneficiaries who meet the income and resource limits will automatically be enrolled in the LIS program. You must apply for the program through the Social Security Administration or your state’s Medicaid office.

Additionally, if you are enrolled in a LIS-approved Medicare Advantage plan, you may be able to save even more on your healthcare costs. These plans offer additional benefits such as dental, vision, and hearing coverage and may have lower out-of-pocket costs than standalone Part D plans. 

You can connect with me wherever you prefer, I provide useful information and insights on a range of topics concerning Medicare. Please feel free to explore the available resources and gain valuable knowledge.

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