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.

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.

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.

Prescription Drug Plan (PDP)

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

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.

Medicare Advantage Perscription Drug Plan (MA-PD)

The Part D prescription drug plan that will be offered to enrollees in a Medicare Advantage managed care plan.

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.

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.

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.

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.

Medicare Savings Plan

Medicaid programs that help pay for some or all of Medicare premiums and deductibles.

Partial dual eligible

Low-income individuals with Medicare, including Qualified Medicare Beneficiaries (QMB), Specified Low-Income Medicare Beneficiaries (SLMB), and Qualifying Individuals (QI), as well as Supplemental Security Income (SSI) recipients and individuals with Medicare Savings Plans. These individuals will have facilitated enrollment by CMS into prescription drug plans and will receive financial help with the costs of Medicare Part D.

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.

Medigap Policy

A Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in original Medicare coverage.

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.

Qualified Medicare Beneficiary (QMB)

A person with an income equal to or below 100% of the Federal Poverty Level and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Qualified Individual (QI)

A person with an income between 120% and 135% of the Federal Poverty Level (FPL) and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Qualified Medicare Beneficiary (QMB)

A person with an income equal to or below 100% of the Federal Poverty Level and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

Specefied Low-income Medicare Beneficiary (SLMB)

A person with an income between 100% and 120% of the Federal Poverty Level and limited financial resources who receives some assistance with Medicare costs but is not on Medicaid.

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 (known as the Extra Help program) to help defer their prescription drug costs. Providers need to be aware that the reduction in medical expenses may change the eligibility of other programs in which consumers are currently participating. Each consumer’s situation will be unique, so it is important to be vigilant about 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, a consumer may see his/her Food Stamps benefit go down as they spend less on drugs, but the decline is expected to be more than offset by Medicare’s Extra Help. With Extra Help, consumers will have more cash to spend on things they need other than medications, like food.

Changes in medical expenses should be reported when the consumer files to renew his/her Food Stamps benefit. However, if the consumer’s medical expense went up for any reason, he/she can report the increased cost at any time.

Providers should give consumers who are receiving Food Stamps and are eligible for Extra Help a copy of the CMS Tip Sheet “Information Partners Can Use: Food Stamps,” 5/25/05.

HOUSING

What is the impact of the Medicare prescription drug coverage on housing assistance?

Consumers will not lose housing assistance eligibility if they 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 the rent that a consumer pays may increase, but their expenditures on prescription drugs should decrease. The increase in the consumer’s rent cost is expected to be more than offset by Medicare’s Extra Help. Using the subsidy means consumers will have more cash to spend on things they use.

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

Providers should provide and review with consumers who are receiving housing assistance and are eligible for Extra Help the CMS Tip Sheet “Information Partners Can Use: Housing Assistance from the Department of Housing and Urban Development (HUD).”

SPEND DOWN

What is the impact of the Medicare PDP on Medicaid Spend Down?
Consumers will not lose Medicaid Spend Down if they 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 a person’s income to a level below the maximum allowed by a particular state’s Medicaid plan. The subsidy program will reduce a consumer’s payments for prescription drug expenses.

However, if a consumer “spends down” to Medicaid because they have high drug costs, they may find that the new Medicare prescription drug plan covers their drug spending and they 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.

Consumers who have partial dual eligibility, such as Qualified Medicare Beneficiaries (QMB), Specified Low-Income Medicare Beneficiaries (SLMB), Qualifying Individuals (QI), and consumers with Supplemental Security Income (SSI), will have slightly different enrollment and Extra Help procedures. Providers should provide and review with consumers (who are utilizing the Medicaid Spend Down process and are eligible for subsidy assistance) the CMS Tip Sheet “Information Partners Can Use: Medicaid Spend Down.”

Current as of 9-26-2005

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