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.

Spend down

This option allows a person to spend down to Medicaid eligibility by having medical expenses that can be subtracted from their income. Subtracting medical expenses such as prescription drugs and eye glasses from your income can reduce a person’s income to a level below the maximum allowed by a particular state’s Medicaid plan.

Exception

The first phase of the appeals process; a formal decision by a Medicare prescription drug plan to cover a medication not on its formulary, or to reduce a co-payment for a drug not on the PDP’s preferred list. If the plan does not approve the exception, the appeals process can continue.

Formulary

A list of medications that a prescription drug plan covers (prior authorization by the Medicare prescription drug plan may be required).

Medicare prescription drug coverage

The new prescription drug benefit added to the federal Medicare program, known as Medicare Part D. The prescription drug coverage will begin on January 1, 2006.

Effects on Subsidy Assistance

What is the impact of enrollment in the Medicare prescription drug benefit on Food Stamps, Housing Assistance and Medicaid Spend Down?

The Medicare prescription drug benefit is designed so that consumers will not be worse off for receiving subsidy assistance to help defer their prescription drug costs. Consumers need to be aware that the reduction in medical expenses may change the eligibility of other programs in which they are currently participating. Each person’s situation will be unique, so it is important to be aware of how Medicare prescription drug coverage affects other benefits.

FOOD STAMPS
What is the impact of the Medicare prescription drug coverage on food stamps?
With the Extra Help to defer prescription drug costs, you may see your Food Stamps benefit go down as you spend less on drugs, but the decline is expected to be more than offset by Medicare’s Extra Help. With Extra Help you should have more cash to spend on things they need other than medications – like food.

Changes in medical expenses should be reported when you file to renew your Food Stamps benefit. However, if your medical expenses went up for any reason, you can report this increased cost at any time.

HOUSING
What is the impact of the Medicare prescription drug coverage on housing assistance?
You will not lose housing assistance eligibility if you qualify for Extra Help in paying for the new Medicare Prescription Drug Plan.

With the Extra Help to defer prescription drug costs, the portion of your rent that you pay may increase, but your costs on prescription drugs should decrease. The increase in your rent cost is expected to be more than the offset by Medicare’s Extra Help. Using the Extra Help means you will have more cash to spend on other things.

After you know the amount of Extra Help you qualify for, you should discuss with the agency that handles your rent determination the impact of the Extra Help on the portion of the rent that you will be responsible for.  By doing this, you will know whether or not your rent will increase at the next recertification.  Participation in a Medicare prescription drug plan does not need to be reported until your family income and composition is recertified.

SPEND DOWN
What is the impact of the Medicare PDP on Medicaid Spend Down?
You will not lose Medicaid Spend Down if you qualify for Extra Help in paying for the new Medicare prescription drug coverage.  This option allows a person to spend down to Medicaid eligibility by having medical expenses that can be subtracted from their income. Subtracting medical expenses such as prescription drugs and eye glasses from your income can reduce your income to a level below the maximum allowed by a particular state’s Medicaid plan. The Extra Help program will reduce your payments for prescription drug expenses.

However, if you “spend down” to Medicaid because you have high drug costs, you may find that the new Medicare Prescription Drug Plan covers your drug spending and you no longer “spend down” as quickly to become Medicaid-eligible. Under the spend-down process, a person becomes eligible for Medicaid even if they have too much income to qualify otherwise.

 

Current as of 9-26-2005

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