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What's New? Medicare's Drug Subsidy 6/2/2005 - Q: Does Medicare offer subsidies for its new drug plan? A: Yes. The new Medicare Part D drug plan begins January 1, 2006. Medicare will be offering "extra help" for people 65 and over, and some disabled persons. This financial aid will cover the drug plan premiums, deductibles, and copayments, and will average around $2,100 a year. Three groups will be eligible for extra help: Group 1: People on Medicare and Medicaid whose income is below $798 a month for one person, and $1,070 for a married couple. Assets must be below $6,000 for one person, $9,000 for a couple. (Assets doesn't include your house, or car--only funds that can be converted into cash within 20 days, like savings accounts and stocks.) People in Group 1 won't have to pay the $250 Medicare D deductible, or the $35 a month premium, and only small drug copayment. Group 1 has an out of pocket cap of $3,600, with Medicare paying anything over the cap. Group 2: People on Medicare with incomes higher than Group 1 levels, up to $1,077 a month for one person, and $1,444 a month for a couple, and assets up to $7,500 for one person, $12,000 for a married couple. Group 2 people don't have to pay the Part D deductible or monthly premium, with small drug copays, and $3,600 out of pocket cap. Group 3: People on Medicare who don't fit into the first two groups, but have income below $1,197 per month for one person, or $1,604 per month for a couple, and assets no greater than $11,500 for one person, or $23,000 for a couple. Group 3 will pay a $50 deductible, will have a lowered monthly premium, will pay 15% copayment on drugs, and the $3,600 out of pocket cap. Notices about financial help were mailed by the Social Security Administration in late May to Medicare recipients they believe will qualify for financial help. Letters are being sent by the last two digits in your Social Security number, so some people will get notices before others. The notice includes a 16 question application for the low-income subsidy. The application asks questions about bank accounts, stocks, bonds, life insurance, income, and gives Social Security the right to verify your answers. You can ask someone to file an application for you. Beginning in late May, Medicare began sending out letters to people who automatically will be given the subsidy, such as people on Medicare and full Medicaid, people on Supplemental Security Income (SSI), and people on the Medicare "Buy In" program. These people will not have to apply for the subsidy. Once you qualify for the Medicare subsidy, you still need to enroll in a Medicare drug plan to use the subsidy. If you don't choose a plan, Medicare will pick a plan for you. Help in picking a plan is not available yet, because the plans will not be known until October 15th. For more information on the low income subsidy, call 1-800-Age-Info and press "2". Back to What's New?
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