Everything You Need to Know About the New Medicare Prescription Drug Benefit, Part 2

21. Does it make a difference if I apply through Social Security or Medicaid?

Yes. The application process may be easier through the Social Security Administration. The Social Security application form allows you to self-attest to your income and assets. That means you do not have to submit proof of your income and assets up front. You can fill out the application on their web site, mail in a paper application, or apply over the phone. There is no need for an in-person interview. The Social Security Administration (SSA) will perform a computer check with other government agencies, such as the IRS. You may need to submit proof if SSA records differ considerably from the information you give on your application.

If you apply through your local Medicaid office, the application process will depend on the state in which you live. Your state can choose to use an application process that is more complicated than the SSA process. For example, your state may require proof of your income and assets, and have you come to the Medicaid office for a personal interview.

SSA, however, will not screen you for additional benefits for which you may be eligible. State Medicaid offices, on the other hand, must screen all applicants for the Medicare Savings Programs and other benefits for which they may qualify.

In addition, some state Medicare Savings Programs (MSPs) have less strict rules for counting income and assets, or do not consider assets at all. If you do not directly qualify for extra help, ask a Medicaid counselor if you qualify for an MSP. If you are enrolled in an MSP you automatically qualify for extra help.

22. What do I have to do after I get extra help?

Once you are notified by mail that you will get extra help (either because you applied for it or because you automatically qualified for it), you should enroll in a Medicare private drug plan beginning November 15, 2005. If you want your coverage to start in January 2006, you should enroll in a plan by the end of 2005. To find the plan that best meets your needs—covers the drugs you need and works at the pharmacies you use regularly—starting in mid-October look in your “Medicare & You 2006” handbook, call 800-MEDICARE or visit www.medicare.gov.

If you do not enroll in a Medicare private drug plan by May 15, 2006, Medicare will randomly assign you to a plan. Your coverage will begin June 1, 2006. You should receive a letter in the spring of 2006 detailing which plan you will be enrolled in if you do not choose one yourself before May 15, 2006.

If you are currently in Original Medicare, you will be enrolled in a stand-alone drug plan whose premium is at or below the extra help premium amount in your area. If you are in a Medicare private health plan (such as an HMO or PPO), you will be enrolled in the lowest premium prescription drug plan from the company that sponsors your Medicare health plan.

23. I am eligible for extra help paying for my Medicare drug costs. How much do I have to pay for my medications?

There are different levels of extra help depending on your income. The chart below shows the different levels and how much you have to pay under each.

Notes:

• Your premium may be higher if you choose a plan that costs more than the extra help premium amount in your area.
• Income limits may be higher if you support family members who live with you or if you live in Alaska or Hawaii.
• Certain types of income and assets are excluded from calculations, so you may exceed the limits and still qualify (see question 35).

24. If my husband and I have income that is below 135% of the FPL but we have $16,000 in the bank, which level of extra help do I qualify for?

You would qualify for the help given to people whose income is below 150% of the FPL because your assets exceed the limits for the higher level of help (see question 23).

25. How much will my premium be if my income is between 135% and 150% of the FPL?

If your income is between:

• 136% and 140% of the FPL, you will pay 25%;
• 41% and 145% of the FPL, you will pay 50%;
• 146% and 150% of the FPL, you will pay 75%;

of the average premium in your area (benchmark premium).

Note: The extra help only pays a set maximum premium determined by the drug plan premium in your area. If you choose a plan that costs more than the extra help will pay, you will have to pay the difference.

26. I get drug coverage through Medicaid. Should I apply for the extra help paying for Medicare drug costs?

No. If you have Medicaid you automatically qualify for the extra help paying for your Medicare drug costs. You should have received a letter in May or June 2005 letting you know that you automatically qualify for the extra help and do not need to apply.

However, you do need to choose a plan through which to get your Medicare drug coverage. If you do not enroll in a Medicare private drug plan by December 31, 2005, you will be randomly enrolled in Medicare private drug plan. If you are currently in Original Medicare, you will be enrolled in a stand-alone drug plan whose premium is at or below the extra help premium amount in your area. If you are in a Medicare private health plan (such as an HMO or PPO), you will be enrolled in the lowest premium prescription drug plan offered by that company.

You should receive a letter in the fall of 2005 detailing which plan you will be enrolled in if you do not choose one yourself before December 31, 2005. You should call 800-MEDICARE or visit www.medicare.gov to make sure the plan to which you have been assigned covers the drugs you need and that the pharmacies you use regularly are part of that plan’s network. If not, ask the counselor to help you enroll in a plan that meets your needs.

Start using your new Medicare private drug plan on January 1, 2006, in order to get prescription drug coverage. Your only cost will be a small copayment for each prescription.

You will no longer have Medicaid drug coverage You will have a reduced or free drug plan premium and deductible, and small copays for covered drugs. Some state Medicaid programs will supplement the Medicare drug benefit, covering drugs Medicare does not, such as over-the-counter drugs and benzodiazepines. Medicaid will continue to help pay your other Medicare Parts A and B out-of-pocket costs, including premiums, deductibles and coinsurance.

If you have Medicaid, you will be able to change your Medicare private drug plan once a month.

Note: Your new plan will likely cover a one-time refill of your medication if your condition has been stabilized on it, and the medication is not on your new plan’s formulary (see question 69).

27. What if I have Medicaid spend-down?

Once you spend down to Medicaid eligibility, you will automatically qualify for the extra help paying your Medicare drug costs for the rest of the calendar year. You will stay qualified for extra help even if you periodically lose Medicaid eligibility because you do not meet your spenddown in a given month. (Note: Because you have the extra help, you drug expenses will be lower and you may not be able to meet your spend-down as quickly or at all.)

You will automatically qualify for extra help for all of 2006 if you appear on your state’s Medicaid rolls at any time from February 2005 through December 31, 2005. The rules may get stricter starting in 2006, but final guidelines have not yet been issued.

28. I have a Medicare Savings Program. Should I apply for the extra help paying for my Medicare drug costs?

If you have a Medicare Savings Program (QI-1, SLMB or QMB) you automatically qualify for the extra help paying for your Medicare drug costs so you do not need to apply. You should have received a letter in May or June 2005 letting you know that you automatically qualify for the extra help.

However, you do need to choose a plan through which to get your Medicare drug coverage. If you do not enroll in a Medicare private drug plan by May 15, 2006, you will be randomly assigned a plan and your coverage will begin June 1, 2006. You should receive a letter in the spring of 2006 telling you in which plan you will be enrolled in if you do not choose one yourself before May 15, 2006. If you currently have Original Medicare, you will be enrolled in a stand-alone drug plan whose premium is at or below the average plan premium in your area. If you are in a Medicare private plan (such as an HMO or PPO), you will be enrolled in the lowest premium prescription drug plan from the company that sponsors your Medicare health plan. You can switch plans each month.

If you want your coverage to start in January 2006, you should call 800-MEDICARE or visit www.medicare.gov to find the plan that best meets your needs—covers the drugs you need and works at the pharmacies you use regularly. Then enroll in that plan before the end of 2005.

29. What if I receive Supplemental Security Income (SSI) benefits and am not on Medicaid?

If you receive SSI benefits, you automatically qualify for the extra help paying for your Medicare drug costs. You should have received a letter in May or June 2005 letting you know that you automatically qualify for the extra help and do not need to apply. (See question 28 for more details. People with SSI who are not on Medicaid will be treated the same as those who are in a Medicare Savings Programs, except that they can only switch plans one time after they are assigned to a plan.)

30. What happens if I was automatically enrolled in extra help because I have a Medicare Savings Program, Medicaid, or Supplemental Security Income (SSI), but I lose eligibility for these programs during the year?

If you were automatically enrolled in extra help paying your Medicare drug costs because you had Medicaid, a Medicare Savings Program or SSI, and you no longer qualify for that program, you will continue to have extra help for the rest of the calendar year. Medicare will let you know if you no longer qualify for extra help after 2006 and need to complete an application for extra help to continue getting it. If you still qualify for extra help, the amount of help you receive may be reduced. If you do not get extra help, you will have to pay your monthly drug plan premium and plan cost-sharing. If you drop your Medicare private drug plan and later want to enroll in another Medicare private drug plan, you may have to pay a premium penalty (see question 13).

31. What if I am in a Medicare HMO?

If you have Medicaid, you automatically qualify for the extra help. If you do not choose a plan by December 31, 2005, you will be automatically enrolled in the lowest premium prescription drug plan offered by your Medicare private health plan. (See question 26 for information about how to get coverage.)

If you are in a Medicare Savings Program (MSP) or receive Supplemental Security Income (SSI), you automatically qualify for the extra help. (see questions 28 and 29 for information about how to get coverage).

If your income and assets are low, but you are not enrolled in Medicaid, an MSP or SSI, you should apply for the extra help. (see questions 20 and 21).

32. Can I be randomly enrolled in a drug plan with a premium that is higher than the extra help will pay?

Possibly. The extra help will not pay more than the extra help premium amount for your area. If you are enrolled in a Medicare Savings Program, receive Supplemental Security Income (SSI) or have Medicaid, you automatically qualify for the extra help and Medicare will enroll you in randomly assigned drug plan unless you pick one yourself.

If you are currently in a Medicare private health plan (like an HMO or PPO) you will be assigned to a plan offered by the same company that offers the lowest premium Medicare drug coverage. If that plan’s premium for drug coverage exceeds the extra help premium amount for your area, you would have to pay the difference.

You can drop the Medicare private health plan and switch to Original Medicare and pick a standalone drug plan with a premium at or below the extra help premium amount for your area in order to avoid the extra charge.

33. How do I calculate my income to see if I qualify for the extra help?

Earned and unearned income are counted to determine if you meet the income limit for the extra help. If you are married and live with your spouse you have to include your spouse’s income even if only one of you is applying for extra help. Note: Certain types of income are not counted (see question 35).

Earned income includes your wages, earnings from self-employment, and tips from a job (before taxes and deductions). However, less than half of your earned income will be counted, so don’t be afraid to apply even if you think you earn too much money.

Unearned income is income from sources other than work, such as Social Security, state and private pensions, alimony and support payments, and income from a rental property. Unearned income also includes “in-kind support.” You receive in-kind support if someone pays for your living expenses such as food and housing costs (including rent, mortgage payments, real property taxes, heating fuel, gas, electricity, water, sewerage and garbage collection services). How much “in-kind support” will be counted is limited to a maximum of $193 a month for an individual and $289.66 for a couple in 2005.

34. How do I calculate my assets?

If you are married and live with your spouse, you need to consider your combined resources even if only one of you is applying for the extra help.

You should include liquid assets (cash and other items that can be converted into cash within 20 days, such as stocks, bonds, IRAs and 401Ks), and real estate that is not your primary residence. The cash value of life insurance policies will be considered only if their face value (death benefit) is more than $1,500 ($3,000 for couples). Non-liquid assets like cars, the house you live in, household goods/furniture, and jewelry will not be counted.

35. Can I have more income and assets and still qualify for extra help?

Yes. Some of your income and assets are not counted under law. Some examples include:

• a $20-a-month general income exclusion;
• about half of earned income;
• food stamps, heating, housing and weatherization assistance;
• earned income tax credit payments;
• tax refunds;
• expenses paid to enable you to work if you are disabled;
• cash value of life insurance policies with a face value of $1,500 or less (face value means the same as “death benefit,” which is the amount the insurance company will pay when you die; cash value means the amount you get if you cash in the policy today);
• burial spaces and plots (items such as gravesites and cremation urns, for example);
• $1,500 for individuals and $3,000 for couples in assets intended to be used for funeral/memorial services or cremation;
• your primary residence and the property it sits on if you own it;
• retroactive Social Security or Supplemental Security Income (SSI) payments;
• a line of credit from a reverse mortgage.

In addition, if you support relatives who live with you, your income limits will be higher.

36. Will the income and asset limits increase in 2007?

Yes, income limits increase each year based on the federal poverty level (FPL). Asset limits will also increase every year, based on the increase in the U.S. consumer price index.

37. Do I need to show proof of my income and assets?

That depends. You can apply for extra help through either the Social Security Administration (SSA) or your local Medicaid office (see questions 20 and 21).

If you apply through SSA, you will be able to self-attest to your income and assets. You may later need to submit documents if SSA asks for them, though this is not expected to be common.

If you apply through your local Medicaid office, you may be required to show documentation at the time you apply.

38. Can I get help completing my application for extra help?

Yes. Many people can help you apply for extra help paying for your Medicare drug coverage, including:

• anyone authorized to act on your behalf under state law (like some state pharmacy assistance programs);
• someone acting responsibly on your behalf if you are physically or mentally not able to make decisions on your own (including someone with a health care Power of Attorney or a surrogate decision maker as defined by state law);
• anyone you request to act on your behalf to complete the application (such as a family member, friend, neighbor or State Health Insurance Assistance Program—SHIP— counselor).

39. Do I need to reapply for the extra help every year?

You will have to renew your eligibility for the extra help paying for the Medicare drug coverage at least once each year (“redetermination”). When and how you reapply will differ based on your circumstances and on the agency you applied through—your state Medicaid office or Social Security.

If you qualify for extra help before January 1, 2006 it will last through the end of 2006 unless you become eligible for Medicaid, Supplemental Security Income (SSI), or a Medicare Savings Program (becoming eligible for these benefits may qualify you for more help). If you apply after January 1, 2006, your eligibility for extra help will last one year except if you become eligible for Medicaid, SSI, or a Medicare Savings Program. For example, if you apply in February 2006, your eligibility for extra help will continue through February 2007.

If you have a Medicare Savings Program (MSP), SSI or Medicaid, you automatically qualify for the extra help and will not have to recertify as long as you continue to be enrolled in any of these programs.

Note: If a life-changing event (such as marriage, divorce or death of a spouse) changes your income, the amount of your extra help could increase, decrease or end. You can voluntarily report a life-changing event to Social Security.

40. How soon after I apply for the extra help paying for Medicare drug costs will my benefit start?

If you apply for and get extra help and join a Medicare private drug plan before December 31, 2005, you will begin receiving extra help and drug coverage on January 1, 2006. If you apply for the extra help between January 1 and May 15, 2006, or during an enrollment period (see questions 47, 48 and 49) you are eligible to start receiving the help on the first day of the same month that you applied.

If you are already enrolled in a Medicare private drug plan, it will be notified that you are eligible for extra help and must reduce the out-of-pocket costs you have been paying. If your plan already has charged you additional costs from the time you became eligible for extra help (the first of the month in which you applied), it must reimburse you for those costs.

If you have not chosen a plan yet, and do not choose one on your own, Medicare will randomly enroll you in a plan with a premium at or below the extra help premium amount for your area (see question 32).

You can apply for extra help outside of an enrollment period but when your coverage begins depends on whether or not you have already enrolled in the Medicare prescription drug benefit as described above. If you apply for extra help outside of an enrollment period and you are not already enrolled in a Medicare private drug plan, you cannot use your extra help until you can enroll in one. Your extra help would start when your drug coverage starts.

© 2005 Medicare Rights Center