Who's eligible for financial assistance under Medicare Part D?

September 12, 2005

Undoubtedly the public will be hearing much more about Medicare Part D as prescription drug plans (PDPs) are selected and begin promoting their programs. At least one group of people with Medicare already received preliminary information in mailings from the Social Security Administration (SSA): those with low incomes who may qualify for extra help with their out-of-pocket costs associated with the Medicare plans.

Undoubtedly the public will be hearing much more about Medicare Part D as prescription drug plans (PDPs) are selected and begin promoting their programs. At least one group of people with Medicare already received preliminary information in mailings from the Social Security Administration (SSA): those with low incomes who may qualify for extra help with their out-of-pocket costs associated with the Medicare plans.

Persons with incomes below 150% of the federal poverty level and limited assets are eligible for premium and cost-sharing benefits. Those who are not already enrolled in Medicaid must submit an application to SSA for assistance. Those with the lowest incomes pay no premiums or deductible and have small or no copayments. Those with slightly higher incomes will have a reduced deductible and co-pays. Applicants who appear eligible for Medicaid but are not enrolled will be offered an opportunity to enroll.

People who are not sure whether they qualify for assistance or are befuddled by the application process can seek help from their local SSA office. A resource that is particularly useful for a preliminary assessment is the "Benefits Check-up" found at http://www.benefitscheckup.org/. This site was developed by CMS in cooperation with the Administration on Aging. The assessment includes a list of state and local programs that work in conjunction with the new Part D benefit.

Therefore, it is possible that enrolling in an SPAP will provide the same or better coverage as Medicare but at a lower cost. If the state program is more generous, persons with Medicare have the option to stay with their state plan. If the state plan is discontinued at some point in the future, individuals will be eligible to sign up for a Medicare plan without any penalty.

Certain people automatically qualify for aid under Medicare without having to submit an application. These include persons with Medicare and full Medicaid benefits; people who get help from Medicaid to pay their Medicare premiums; and people with Medicare who get Supplemental Security Income (SSI). An estimated 7.5 million people qualify for both federal and state programs, a group referred to as dual eligibles. The dual-eligible population is important because they represent 14% of the Medicaid population but account for 40% of Medicaid spending. One-fourth of dual eligibles live in long-term care facilities. Two-thirds are age 65 or older, and one-third are nonelderly adults with disabilities.

Medicare will automatically enroll persons with dual eligibility to ensure there is no gap in coverage when Medicare Part D goes into effect. In October, Medicare will notify those with automatic enrollment about the plan that was selected for them. Dual-eligible individuals can stay with the plan they were assigned or switch to a plan of their choosing any time after Nov. 15, 2005.

Persons accustomed to receiving a prescription drug benefit under Medicaid may face some transitional issues as they encounter new policies and procedures under their assigned drug plan. For example, former Medicaid clients may face new or higher co-pays. Some state Medicaid programs do incorporate a co-pay, but federal regulations require that a co-pay be waived if a patient cannot afford it. In some areas, it is customary to waive the Medicaid co-pay. However, according to a recent CMS notice, "pharmacists are permitted to waive or reduce cost-sharing amounts provided they do so in an unadvertised, nonroutine manner" when the patient demonstrates financial need or fails to pay.

The Medicare Modernization Act establishes significant benefits for people with low incomes. Some of the provisions require decisions and action in order to be ready for implementation on Jan. 1, 2006.

The author is associate professor, Department of Pharmacy Health Care Administration, University of Florida College of Pharmacy.