These low-income subsidies are intended to reduce or eliminate enrollees’ out-of-pocket expenses associated with the drug benefit, including premiums, deductibles, copayments, and costs in the coverage gap (sometimes called the doughnut hole). Part D plans are required to offer a statutorily defined standard benefit or one that is actuarially equivalent.

WHO QUALIFIES FOR LOW-INCOME SUBSIDIES AND WHAT HELP DO THEY GET?

Dual eligibles who qualify for Medicaid on the basis of their income and assets automatically qualify for Medicare prescription drug low-income subsidies.

Additionally, those who receive premium and/or costsharing assistance from Medicaid through the Medicare
Savings Programs (QMB, SLMB, QI), and those only eligible for SSI cash assistance are also automatically deemed eligible for low-income subsidies and need not apply for them.

Dual eligibles and others deemed eligible for low-income subsidies pay no Part D plan premiums or deductibles, and copayments for brand-name drugs, depending on their income. Though nominal, these copayments are a new expense for many dual eligibles who were not charged for drugs under their state Medicaid programs. Dual eligibles in nursing homes have no drug copayments.

Other low-income Medicare beneficiaries must meet an income and resource test and submit an application to determine if they qualify for low-income subsidies. These individuals must apply separately for the additional assistance through the Social Security Administration (SSA) or their state Medicaid program. The level of assistance for other low-income beneficiaries who qualify for drug benefit subsidies varies based on their income and resources. In general, greater assistance is targeted to those with lower incomes and resources (Figure 1).

HOW IS ELIGIBILITY DETERMINED?

Income and other resource levels are used to determine eligibility for the low-income subsidy. Social Security benefits, Veterans benefits, public and private pensions, annuities, and in-kind support are counted as income. Eligibility is based solely on the income of the applicant (and spouse, if applicable), regardless of whether there are other household members with income.

Resource levels used to determine eligibility for low income subsidies are higher (more generous) than those used for SSI and Medicaid. Resources are defined as assets that can typically be converted to cash within 20 days, such as stocks, bonds, and checking, savings, and
retirement accounts. An applicant’s principal home, car, and life insurance policies do not count toward the resource limit. Individuals with Medicare and Medicaid $0 $0 No copays benefits in nursing homes

HOW DO BENEFICIARIES APPLY FOR SUBSIDIES?

Beneficiaries who are not automatically eligible for low income subsidies must apply for this assistance through SSA or their state Medicaid programs. Signed applications (even those not entirely complete) may be submitted in person, by mail, by phone, or online through the SSA Web site. Documenting income or resources is not required. Applicants found eligible in 2006 retain eligibility for the remainder of the year. After 2006, SSA and states can set their own redetermination timeframes.

If beneficiaries apply for the Part D low-income subsidy through their state Medicaid program, Medicaid must also screen for eligibility for benefits under the Medicare Savings Programs. However, SSA is neither required to screen for Medicare Savings Program eligibility nor refer applicants to Medicaid for screening. Since SSA has processed the vast majority of low-income subsidy applications, many beneficiaries may have missed a key opportunity to learn about Medicare Savings Program or Medicaid benefits for which they might also qualify.

HOW DOES DRUG PLAN ENROLLMENT WORK?

Beneficiaries who apply and are found eligible for the low-income subsidy must also enroll in a Medicare drug plan for the subsidy to take effect. In 2006, the Administration facilitated enrollment in drug plans for one million beneficiaries who qualified for the subsidy but had not signed up for a plan prior to the May 15, 2006 enrollment deadline.

In 2006, beneficiaries who apply and qualify for the low income subsidy after the enrollment deadline have a special enrollment period that enables them to sign up for a Part D plan for the remainder of the year, or they will be automatically enrolled. Those who are
automatically enrolled can switch plans once before the next enrollment period which begins on November 15.

Individuals who qualify for the low-income subsidy after May 15th will not be subject to the late enrollment penalty in 2006. However, like all other Medicare beneficiaries, those with low incomes who do not have drug coverage in 2006 and who later decide to enroll in a Part D plan will face a penalty for late enrollment – although the penalty will be reduced for those eligible for low-income subsidies.

Dual eligibles, unlike other low-income beneficiaries, were automatically enrolled in plans with premiums at or below the state average at the beginning of 2006. They are permitted to switch plans throughout the year, unlike other Part D enrollees who will be able to switch plans only during the annual coordinated enrollment period at the end of each year.

Source: www.medicare.gov

Medicare Advantage Plans are health plan options that are part of the Medicare program. If you join one of these plans, you generally get all your Medicare-covered health care through that plan. This coverage can include prescription drug coverage. Medicare Advantage Plans include:

• Medicare Health Maintenance Organization (HMOs)
• Preferred Provider Organizations (PPO)
• Private Fee-for-Service Plans
• Medicare Special Needs Plans

When you join a Medicare Advantage Plan, you use the health insurance card that you get from the plan for your health care. In most of these plans, generally there are extra benefits and lower copayments than in the Original Medicare Plan. However, you may have to see doctors that belong to the plan or go to certain hospitals to get services.

To join a Medicare Advantage Plan, you must have Medicare Part A and Part B. You will have to pay your monthly Medicare Part B premium to Medicare. In addition, you might have to pay a monthly premium to your Medicare Advantage Plan for the extra benefits that they offer.

If you join a Medicare Advantage Plan, your Medigap policy won’t work. This means it won’t pay any deductibles, copayments, or other cost-sharing under your Medicare Health Plan. Therefore, you may want to drop your Medigap policy if you join a Medicare Advantage Plan. However, you have a legal right to keep the Medigap policy.

To compare Medicare Advantage Plans, go to the Medicare Options Compare.

Medigap (Supplemental Insurance) Policies

A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn’t cover. If you are in the Original Medicare Plan and have a Medigap policy, then Medicare and your Medigap policy will pay both their shares of covered health care costs.

Insurance companies can only sell you a “standardized” Medigap policy. These Medigap policies must all have specific benefits so you can compare them easily.

You may be able to choose up to 12 different standardized Medigap policies (Medigap Plans A through L). Medigap policies must follow Federal and State laws. These laws protect you. A Medigap policy must be clearly identified on the cover as “Medicare Supplement Insurance.” Each plan, A through L, has a different set of basic and extra benefits.

It’s important to compare Medigap policies because costs can vary. The benefits in any Medigap Plan A through L are the same for any insurance company. Each insurance company decides which Medigap policies it wants to sell.

Generally, when you buy a Medigap policy you must have Medicare Part A and Part B. You will have to pay the monthly Medicare Part B premium. In addition, you will have to pay a premium to the Medigap insurance company.

You and your spouse must each buy separate Medigap policies. Your Medigap policy won’t cover any health care costs for your spouse.

For additional information on Medigap policies, including why you would want to buy a Medigap policy and information about what Medigap policies cover, please read our publication, Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.