Medicare

How Does Medicare Extra Help Work?

Medicare Extra Help is a federal program designed to assist low-income subscribers with their Medicare payments.

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Original Medicare includes Part A (Hospital Insurance), and Part B (Medical Insurance). Subscribers can join a separate drug plan to receive Medicare Part D (Drug Coverage).

Medicare Part D Low-Income Subsidy — also known as Low-Income Subsidy (LIS) — was created to help Medicare subscribers lower the cost of their prescription drugs. Unlike Medicare Part A & B, Medicare Part D isn’t enrolled in through the Social Security office. Part D enrollment requires that you choose from your county’s available plans via private insurance carriers.

Medicare Extra Help is a federal program that assists low-income subscribers with their Medicare payments. Whereas Part D helps subscribers pay for their RX medications, Extra Help provides payment assistance for plan premiums, deductibles, and coinsurance fees. The savings amount Extra Help provides fluctuates based on the enrollee’s income.

How Medicare Extra Help Works

With Medicare Extra Help, the recipients must provide their insurer with the proper documentation to prove Extra Help is approved and active. The following documents can be used as proof of enrollment:

  • A purple, yellow, or green notice of automatic qualification from Medicare
  • An Extra Help award notice from the Social Security Administration (SSA)
  • The Supplemental Security Income (SSI) award letter
  • Copy of the recipient’s Medicare card

Once you receive Medicare Extra Help, you’ll be asked periodically to complete a Review of Your Eligibility for Extra Help to ensure you’re still eligible and are receiving all the benefits you deserve.

Who Qualifies For Medicare Extra Help?

To qualify for Medicare Extra Help, each applicant must meet certain criteria, including:

  • Must reside in the US – You must live in one of the 50 States or the District of Columbia.
  • Medicare Part D – You must be enrolled in Part D or eligible for enrollment.
  • Income level limitations – An individual’s income cannot exceed $15,510, and a married couple’s income cannot exceed $26,130 income.
  • Resource level limitations – Resource limitations for individuals cannot exceed $15,510, and $30,950 is the upper limit for a married couple living together. Resources include the value of things that you own.

An example of resources include stocks, bonds, mutual funds, individual retirement accounts (IRAs), and real estate (other than your primary residence). For more information on what does and doesn’t qualify as a resource, visit the Social Security Administration’s website, SSA.gov

Special Programs

Participants enrolled in special programs such as Supplemental Security Income (SSI), and the Medicare Savings Program, are still eligible to receive Extra Help.

If you do not meet the requirements listed above, you can apply through Social Security. The income and asset limits for Extra Help eligibility change each year, so recipients must qualify yearly.

Medicare Extra Help Benefits

Extra Help Benefits are provided based on the amount of income and resources a person has. If qualified for Full Subsidy Benefits from Extra Help, subscribers can receive:

  • Full premium assistance up to the premium subsidy amount
  • Nominal cost-sharing up to the out-of-pocket threshold
  • No gap in coverage

Premiums and deductibles

Medicare Extra Help reduces the cost of premiums and deductibles. And in some cases, deductibles are waived entirely. The amount of cost reduction provided by Extra Help is dictated by the enrollee’s combined income and resources. There are state-specific benchmarks that must be adhered to, so it’s important to research your state’s policy on premium and reduction rates.

Copayments

Copayments and prescription drug costs can be reduced significantly when enrolled in Medicare Extra Help Benefits. The savings structure falls under two main categories depending on if you have Medicare only, or if you have Medicare and Medicaid and/or a Medicare Savings Program. There are two tiers under each coverage option, Partial Extra Help, and Full Extra Help.

Partial Extra Help

  • Income Requirements – Eligibility for Partial Extra Help is available for those whose individual income is less than $1,719 ($2,309 for couples) per month.
  • Asset Requirements – Your assets cannot exceed $15,510 for individuals or $30,950 for couples.

Partial Extra Help provides:

  • 15% coinsurance or the plan copay, whichever is less
  • After $7,050 in out-of-pocket drug costs, you pay $3.95 for generic and $9.85 for brand-name medications, or 5% of the drug cost, whichever is greater.

Full Extra Help

  • Income Requirements – Eligibility for Full Extra Help requires the enrollee’s monthly income to not exceed $1,549 for individuals, or $2,309 for couples, per month.
  • Asset Requirements – Your assets cannot exceed $9,900 for individuals or $15,600 for couples.

Full Extra Help provides:

  • $0 premium and deductible
  • $3.95 for generic and $9.85 for brand-name medication. A $0 copay in out-of-pocket drug costs once the $7,500 deductible is met.

Medicaid and/or a Medicare Savings Program

Medicaid and/or a Medicare Savings Program enrollee receives two different levels of copayment assistance.

The income limit thresholds are the same, and each are provided with $0 premium and deductible amounts.

Medicaid and/or Medicare Savings Program copayment amounts

  • $3.95 generic copay
  • $9.85 brand-name copay
  • After $7,050 in out-of-pocket drug costs, there is no copay

Medicaid Savings Program copayment amounts

  • $1.35 generic copay
  • $4.00 brand-name copay
  • After $7,050 in out-of-pocket drug costs, there is no copay

Special Enrollment Period

Most people on Medicare can only make changes to their plan between October 15 and December 7. If changes are made outside of that timeframe, a late enrollment penalty can be assessed.

With Extra Help, subscribers can take advantage of Special Enrollment Periods (SEPs), which expand the window to make changes to coverage significantly.

SEPs with Extra Help

  • January – March
  • April – June
  • July – September

If approved for SEPs, the enrollee cannot make changes during the October 15 through December 7 period.

Late Enrollments Penalties

The cost of the late enrollment penalty depends on how long the policyholder went without Part D or creditable prescription drug coverage.

Medicare’s late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022) times the number of full months the policyholder went without Part D or creditable coverage. The sum is then rounded up to the nearest dime, and added to the Part D premium.

For example, if a policyholder went 14 months without Part D or creditable coverage, the calculation would work like this:

.14 x $33.37 = 4.67

4.67 is rounded to the nearest tenth: $4.70

Thus $4.70 would be added to the monthly Part D premium due.

However, If you’re enrolled in Medicare Extra Pay, you don’t pay the late enrollment penalty. Other ways to avoid a Part D late enrollment penalty include:

  • Enrolling in a Medicare drug coverage plan when you’re first eligible.
  • Enrolling in Medicare drug coverage if you lose other creditable coverage.
  • Keeping all records showing when you had creditable drug coverage

How To Apply For Medicare Extra Help

There are multiple ways to apply for Medicare Extra Help. You can apply from the comfort of your home online, or at your local Social Security office. Applications can even be submitted by telephone. Here are some helpful links to assist you with the application process:

  • Online Application – You can apply online via the official website of the U.S. Social Security Administration.
  • In-person – Simply visit your local Social Security Office and request a paper application to apply by mail. Also, many Social Security Offices will have an employee who can assist you with the online application process.
  • Telephone – the Social Security Administration’s telephone number is 1-800-772-1213 (TTY 1-800-325-0778. You can request a paper application over the telephone too.
  • Mail – If you have access to a paper application, you can mail it from your home or at your local US Post Office.