Medicare

The federal health insurance program for: people 65 years of age or older; certain younger people with disabilities; and people of any age with end-stage renal disease (permanent kidney failure with dialysis or a transplant), sometimes called ESRD. Part A pays for hospital care, Part B pays for doctor visits, Part C includes the managed care option, and Part D is the new prescription drug benefit.

Medicaid

A joint federal and state program that provides medical coverage for people with low incomes and limited resources. Medicaid programs vary from state to state.

Prescription Drug Plan (PDP)

A private insurance plan that offers coverage for prescription drugs under Medicare, also known as a Medicare prescription drug plan.

Centers for Medicare and Medicaid Services (CMS)

The federal agency that runs the Medicare program, including the Medicare Prescription Drug Benefit program. In addition, CMS works with the States to run the Medicaid program.

Dual eligible (or duals)

A person who is eligible for both Medicare and Medicaid. CMS will automatically enroll dual eligibles in low-premium PDPs. If they choose to stay in a low-premium PDP, dual eligibles’ only cost for drugs will be a $1 co-pay for generic drugs and a $3 co-pay for brand-name drugs.

Premium

Regular monthly payment made to a health or prescription drug plan by beneficiaries for health care coverage. The lowest average premium for a Medicare prescription drug plan is expected to be about $32.

Social Security Administration (SSA)

The federal government agency that administers and enrolls Medicare beneficiaries into the low-income subsidy program, Extra Help.

Extra Help

The name that has been given to the low-income subsidy program for Medicare Part D. Extra Help will pay for part or all of the Medicare prescription drug premiums for Medicare beneficiaries who have incomes below 135% of the Federal Poverty Level (FPL) (including dual eligibles) and part of the premium for those who have incomes between 135% and 150 % of the FPL. The benefit will protect beneficiaries under 150 % of the FPL from the gap in coverage referred to as the "doughnut hole." Dual eligibles will get this benefit without applying. All others will need to apply for Extra Help.

Limited Income

Under Medicare, limited income refers to income below 150% of the Federal Poverty Level. In 2005, the year Medicare prescription drug benefit goes into effect, this is equal to a yearly income of $14,355 for an individual and $19,245 for a couple, with other resources of no more than $11,500 for an individual and $23,000 for a couple.

Deductible

A flat dollar amount a person must pay before Medicare will pay for prescription drugs costs. The standard yearly deductible for Medicare patients who don’t have a low-income subsidy is $250.

Co-payment

A dollar amount that a person must pay out-of-pocket for a medication or other health service. For example, a PDP may ask for a $3 co-payment for each generic prescription and $5 for brand name prescriptions. Co-pays may be further tiered by PDPs to discourage use of more expensive drugs.

Network pharmacy

A pharmacy that is under contract with a Medicare prescription drug plan. Plan members must get their prescriptions filled at a network pharmacy.

Co-insurance

The percentage of the charge for drugs that a Part D enrollee may have to pay after any plan deductibles are paid. For instance, 10% co-insurance on a $50 prescription would be $5.

Limited Income

Under Medicare, limited income refers to income below 150% of the Federal Poverty Level. In 2005, the year Medicare prescription drug benefit goes into effect, this is equal to a yearly income of $14,355 for an individual and $19,245 for a couple, with other resources of no more than $11,500 for an individual and $23,000 for a couple.

Supplemental Security Income (SSI)

A program to help aged, blind, and/or disabled people who have little or no income pay for basic needs such as food, clothing, and shelter.

State Health Insurance Assistance Program (SHIP)

A state program that gets money from the federal government to give free local health insurance counseling to people with Medicare.

Extra Help

Extra Help is a program that helps eligible people with Medicare pay for some or most of their prescription drug costs. If you qualify for Extra Help, you will not receive money; instead, Medicare will pay for part, or in some cases, all of your drug costs.

Questions Answered

NEW Do individuals who have applied for Extra Help need to wait for a letter telling them if they qualify for the subsidy before enrolling in a plan?

CMS said on a conference call with SHIPs that individuals should NOT wait to enroll. If they are determined eligible for the subsidy after their plan coverage starts, the Plan will reimburse them for any expenses made out of pocket (CMS will notify plans of those awarded the Extra Help). Keep in mind that this does not affect duals, who are automatically eligible for the Extra Help and do not need to apply.

Can you get Extra Help ?

The amount of financial help you receive from the federal government will depend on which of the following two categories describes your financial situation.

  1. If your income is below $12,920 a year for individuals and $17,321 a year for couples this year (in 2006, when the drug benefit begins, these income limits will be higher reflecting inflation) and you have assets below $6,000 for individuals and below $9,000 for couples, you can apply for the Extra Help.
    Extra Help will cover both your premium for the lowest cost drug plan or managed care plan in your area and will also cover your deductible. If you choose a higher cost drug plan, you will have to pay the extra premium amount yourself. You will have co-payments between $1 and $5, depending on your exact income, until you pay $3,600 in out-of-pocket drug costs; then, your medications will be covered in full with no co-pay.
  1. If your income is $14,355 a year for individuals and $19,245 a year for couples (in 2006, when the drug benefit begins, these income limits will be higher reflecting inflation) and you have assets below $10,000 for individuals and below $20,000 for couples, you can also apply for Extra Help.
    Extra Help will cover your premium on a sliding scale (the exact amount of help with your premium will be based on your income and assets information). In addition, your deductible will be reduced to $50 and your co-pay will be 15% on your out-of-pocket drug costs up to $3,600. Once your out-of-pocket drug costs reach $3,600, you will only have to pay $2-$5 co-pays on each medication.

How can I apply for Extra Help?

By August 2005, you should have received a form to apply for Extra Help from the Social Security Administration (SSA). It is very important that you fill out this application and return it to the SSA. Follow the directions closely on the form and submit it to the Social Security Administration.

If you have not already received this form in the mail and think you may qualify for this help, call the SSA at 1-800-772-1213 or go to http://socialsecurity.gov for help. If you are unsure whether you qualify for Extra Help, you should apply. SSA’s application process gives you the quickest response. You can also apply at your state Medicaid office, and they will also screen you for other government assistance programs that might be available to you. If you need help, go to your local Medicaid office or your local State Health Insurance Assistance Program (SHIP).

What kind of financial information do I need to apply?

To fill out the Extra Help application, you will first need to have statements about your income and other sources of money (this does not include your home). You can find this information in your bank statements, investment statements, life insurance policy statements, stock certificates, tax returns, and pension award letters.

You will need to have numbers for your earned and unearned income:

  • Earned Income – includes wages and net earnings from self-employment.
  • Unearned Income – includes social security and veteran’s benefits, worker’s compensation, unemployment insurance benefits, railroad retirement, pensions, annuities, rent payments received, death benefits, alimony or support payments, in-kind support, and maintenance.

Also, you will also need to know information about certain kinds of assets (also called resources):

  • Countable Assets – these are resources that can be turned into cash within 20 days, including money in bank accounts, stocks, bonds, savings bonds, mutual funds, retirement accounts, cash, cash value of life insurance policies, and equity value of real estate (not including your home)

How do I know if my application for Extra Help is approved?

You should receive a decision letter from the Social Security Administration or your state Medicaid agency telling you if you will get Extra Help with your drug plan costs. Keep a copy for your records. If the government decides that you do not qualify for the Extra Help, but you believe that you do, you may appeal and ask the government to review the decision. Follow the directions in the letter they send you to file an appeal.

Important Note: In addition to applying for this financial assistance, you will also need to sign up for a prescription drug plan beginning November 15, 2005.

Current as of 12-27-2005

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