Medicare Extra Help is a federal assistance program that helps people pay for the costs of Medicare prescription drugs. The program is for people with a limited income.
Medicare Extra Help is not a Medicare policy. Instead, the Social Security Administration (SSA) oversees the program as a form of assistance.
Sometimes, providers refer to this as the Part D Low-Income Subsidy.
In this article, we explain how people may benefit from Medicare Extra Help, which people qualify, and what the advantages are.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Extra Help covers some costs of a Medicare Part D plan. To understand what it involves, it is useful to learn about Medicare Part D.
This optional section of Medicare coverage accounts for prescription drug coverage.
People who are eligible to receive Medicare Part A and B can also purchase Medicare Part D.
Private insurance companies have a contract with the federal government that allows them to offer Medicare Part D plans. Medicare Part D involves an enrollee using the insurer’s network of pharmacies to buy prescription drugs.
However, individuals with Medicare Part D usually still have out-of-pocket expenses that may add up.
For example, people with a Part D plan still pay for some drug costs. The exact cost of Part D to the individual depends on the plan they choose and the medications they take.
Medicare Extra Help provides assistance that helps people meet the following expenses:
- monthly premiums for Medicare Part D
- medication copayments
Some people automatically qualify for Medicare Extra Help and do not have to apply. These include:
- individuals who receive both Medicare and Medicaid
- people who have a Medicare Savings program
- those who receive Supplemental Social Security Income
Typically, people that meet the above eligibility requirements receive a notice from the Centers for Medicare and Medicaid Services (CMS), letting them know they do not have to apply for Extra Help.
People that do not meet the above requirements may still qualify for Medicare Extra Help based on their income. To qualify for the Extra Help program, a person must meet the following criteria:
- They have Medicare Part A, Medicare Part B, or both.
- They live in the United States.
- They meet the income criteria.
To apply for Medicare Extra Help, a person submits an application through the SSA online or in person at a local Social Security office. Once they review a person’s eligibility, the SSA notifies applicants by mail if they qualify for Extra Help.
Applying for the Medicare Extra Help Program does not enroll a person in Medicare Part D. That is a separate process that involves reviewing insurance providers and selecting a plan.
People that do not automatically qualify for Medicare Extra help may still meet the requirements for the program, depending on their income.
The income criteria for Medicare Extra Help may change yearly. The program may provide full or partial help based on a person’s monthly income and assets.
According to the Medicare Rights Center, the criteria for 2020 include the following:
- below $1,615 monthly income for a single person
- below $2,175 monthly income for a couple
- assets worth up to $14,610 for single people or $29,160 for a married couple living together, according to the Social Security Administration
Qualifications for full Medicare Extra Help includes:
- a monthly income of up to $1,456 for a single person
- a monthly income of up to $1,960 for married couples
- assets worth up $9,360 for singles
- assets worth up to $14,800 for married couples
Assets that the SSA take into account when assessing people for the Extra Help program include:
- combined stocks
- real estate
Assets do not include:
- life insurance
- burial plots
- personal possessions
Individuals that are unsure whether they meet the criteria may still apply. Certain types of assets and income may not count for eligibility.
An additional qualification is enrollment in a Medicare Part D plan.
There are benefits and advantages to having Medicare Extra Help, including the following:
It helps people fund Medicare Part D premiums: People purchase Medicare Part D through a private insurer. Premiums vary in cost. Medicare Extra Help pays that premium up to a specific amount.
This amount, however, varies by state and also depends on whether a person has access to full or partial Extra Help.
It decreases the cost of prescription drugs: Medicare Extra Help assists with copayments, which brings down the overall cost of medications for the enrollee.
It provides a Special Enrollment Period for Medicare Part D: Usually, changes to a Medicare Part D plan are only allowed during the fall open enrollment period, which is mid-October through early December.
However, people with Extra Help can enroll in Medicare Part D or switch plans during a Special Enrollment Period once per calendar quarter.
It waives Medicare Part D late enrollment fee: There are no Medicare Part D enrollment penalties for people that delay Part D enrollment, as long as they have Medicare Extra Help.
Although not everyone qualifies for Medicare Extra Help, it does not hurt to apply.
If the SSA approve an individual for the program, they will not have to pay any extra costs or added expenses.
People who have Medicare Extra Help find that the amount by which it reduces prescription drug costs may vary.
The SSA estimate that Medicare Extra Help reduces prescription drug costs by about $5,000 a year for each recipient.
Medicare Extra Help reduces drug costs in several ways. It lowers the monthly premium for Medicare Part D. People that receive full Extra Help pay a $0 premium and do not have to meet a deductible.
In 2020, they also have a $3.60 copayment for generic drugs and an $8.95 copayment for brand-name drugs. After they reach $6,350, they no longer need to provide a copayment when buying medications.
Medicare Part D includes prescription medication copayments. As these may vary, the Part D copayment may be lower than the Medicare Extra Help copayment. Individuals with Extra Help pay whichever copay is lower.
Qualifying for Medicare Extra Help in a particular year does not automatically qualify a person for the following year.
Circumstances change, and a person will need to prove that they meet the Extra Help criteria for each enrollment year.
The process to requalify may vary depending on how a person initially met the criteria. For example, a person may have to apply for continued eligibility by providing documentation that confirms their income.
Medicare Extra Help is a social security program that provides extra funding for people who have Medicare Part D.
It can help people afford their monthly premium, deductible, and any copayments on medications. The SSA approves people for inclusion in the Extra Help program based on income and assets.
People will need to requalify for Extra Help every year.
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