Extra help with Part D costs for people with low incomes

Print this page

back to Prescription Drugs

In 2006 Medicare began providing prescription drug coverage called Medicare Part D. Medicare also provides extra help with the cost of prescription drugs for those who qualify. This extra help is also known as the "low-income subsidy" (LIS) program.

For more information on Medicare’s Part D drug benefit, see our Medicare Part D: an overview section.

On this page:

1. Benefits of the Medicare Part D extra help/low income subsidy
2. How to qualify
3. How to apply
4. Benchmark prescription drug plans

1. Benefits of the Medicare Part D extra help/ low-income subsidy (LIS)

The low income subsidy helps pay for some of Part D prescription drug plan costs, including Part D premiums, deductibles and co-payments. Depending on your income and assets, you may qualify for the full subsidy or a partial subsidy. All beneficiaries who qualify for the LIS are allowed to change Part D plans once a month anytime during the year.

↑ back to top

2. How to qualify

Eligibility for Extra Help/LIS for 2008

You are automatically enrolled in a drug plan with Extra Help for 2008 if you qualify for Medi-Cal or a Medicare Savings Program (QMB, SLMB or QI) and:

To get Extra Help, you may apply¹ through the Social Security Administration for 2008 and:

¹ You must also enroll in a Medicare Part D drug plan if you qualify for Extra Help.
² Money set aside for burial expenses is not counted toward assets: Single $1,500 and Couple $3,000.

↑ back to top

3. How to Apply

If you have both Medicare and Medi-Cal

If you have both Medicare and Medicaid (Medi-Cal in California), you do not need to apply for the low income subsidy because you receive it automatically. Medicare will send you a letter about your automatic enrollment in the subsidy program. You will also receive a separate letter that describes how you will be automatically enrolled in a Part D plan for your prescription drug coverage if you have not already chosen a plan by the time you become eligible for Part D.

We recommend that you enroll in a plan before your Medicare coverage begins. This way you can choose the plan you prefer and prevent any gap in coverage. Your Part D benefits will begin the month of your Medicare eligibility. Also, because drug plans cover different drugs, enrolling yourself into a plan (versus waiting to be automatically assigned) allows you to choose a plan that will cover all or most of the drugs that you are taking. For more information, see our Part D FAQ section on Medicare and Medi-Cal.

If you have Medi-Cal with a Share of Cost (SOC)

If you have Medi-Cal with a Share of Cost (SOC), you may qualify for the low-income subsidy program. Unlike people who have full benefit Medi-Cal, you do not automatically qualify for the LIS, unless you meet your SOC. If you do not meet your SOC, you can apply for the LIS through Social Security and may qualify if your income and assets meet the requirements.

If you meet your SOC for any one month between January to June, you qualify for the LIS program for the rest of the calendar year. If you meet your SOC for any one month between July to December, you qualify for the LIS for the rest of the calendar year and the following year. For more information about Medi-Cal with SOC, see our our section on Medi-Cal.

If you are enrolled in a Medicare Savings Program

If you have Medicare and don’t qualify for Medi-Cal but are enrolled in 1 of 3 Medicare Savings Programs (MSPs), you can also get the LIS automatically. These Medicare Savings Programs are: Qualified Medicare Beneficiaries (QMB); Specified Low-Income Medicare Beneficiaries (SLMB); and Qualified Individuals (QI).

Like people who have both Medicare and full benefit Medi-Cal, you will be automatically enrolled into a Part D plan if you do not choose one yourself. This “facilitated” enrollment may take place a couple of months after you are first eligible for the Part D benefit.

Again, we recommend that you enroll in a plan before your Medicare coverage begins. This way you can choose the plan you prefer and prevent any gap in coverage. Your Part D benefits will begin the month of your Medicare eligibility. Also, because drug plans cover different drugs, enrolling yourself into a plan (versus waiting to be automatically assigned) allows you to choose a plan that will cover all or most of the drugs that you are taking. For more information on MSPs, see our section on Medicare Savings Programs.

Extra help program for other low-income Medicare beneficiaries

If you have Medicare with an income below 150% of the federal poverty level (FPL) and meet the asset requirement but are not on other assistance (Medi-Cal or Medi-Cal with SOC or MSP as mentioned above), you can apply for the low-income subsidy at your local Social Security or Medi-Cal office. If you apply at the Medi-Cal office, you should be screened for other programs you may qualify for at the same time. You may also apply for the low-income subsidy over the phone (1-800-772-1213) or on the Social Security website.

There are different levels of subsidy. If your income is higher, between 135-150% of the FPL, you may receive a partial subsidy as shown on the table above. With the partial subsidy, you may have to pay a percentage of the premium (depending on your income) and a deductible even if you enroll in a benchmark plan (described below).

If you apply for and are found eligible for the LIS program, you will be facilitated into a Part D plan if you have not already chosen one yourself (similar to those enrolled in a MSP described above). This will usually occur a couple of months after you become eligible for the subsidy program.

Retiree coverage

Beneficiaries with low incomes who have prescription drug coverage as a retiree benefit should check with the company that processes their retiree benefits before they sign up for the LIS or a Medicare Part D plan. Some low-income retirees are able to keep their retiree coverage and receive the Part D extra help, while others are not.

Medicare Advantage plan enrollment

You can also receive the low-income subsidy if you enroll in a Medicare Advantage plan with prescription drug coverage. The subsidy reduces some or all of the premium that goes toward the prescription drug benefit. You may be fully responsible for the premium that goes toward medical and hospital benefits. See our section “Medicare Advantage (Part C): An Overview.”

↑ back to top

4. Benchmark plans

Basic Medicare Part D plans whose premiums are below the average premium in California are referred to as benchmark plans. The benchmark or average premium in California in 2008 is $19.80. The full low-income subsidy covers the premium and deductible of the benchmark plans. This means you do not pay a premium or deductible if you receive the full LIS subsidy and you enroll in a benchmark plan. You are, however, still responsible for co-payments of $1.05-$5.60 for each covered medication.

If you enroll in a Medicare Part D plan whose premiums are higher than the benchmark, you will pay the difference between the subsidy ($19.80) and the plan's premium. For a complete description of plans, see our section on Medicare Part D: an overview.

View Spanish version of benchmark plan chart.

↑ back to top

back to Prescription Drugs

Page updated April 23, 2008