The Inflation Reduction Act of 2022 (IRA) has recently been expanded to provide additional prescription drug benefits for Medicare recipients. This expansion significantly enhances the Medicare Extra Help program, an initiative that supports individuals with their Part D prescription costs.
Key changes include the elimination of plan premiums and deductibles, combined with lower costs for both generic and brand-name drugs. These improvements are designed to offer much-needed financial relief for lower-income Medicare recipients and improve access to essential medications.
The following guide provides details regarding the expanded program, including who is eligible, how the benefits impact beneficiaries, and the steps needed to apply. With this information, you can make informed decisions and take advantage of benefits that may be available to you.
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The Expansion of Extra Help in 2024
Medicare Extra Help is a federal program designed to assist eligible Medicare beneficiaries with their prescription drug costs under Medicare Part D. It provides assistance with premiums, annual deductibles, and coinsurance, reducing out-of-pocket expenses for individuals who have limited income and resources.
The notable changes from the recent expansion are:
- Eligibility criteria changes
- Plan cost changes, such as premiums and copays
- Overall drug costs
Learn more about the specifics of the changes in the following sections.
Eligibility Criteria Changes
Prior to the expansion, individuals with an income of 135% of the federal poverty guideline were eligible for full Extra Help benefits. Now, the income threshold has been increased to 150% of the federal poverty guideline, providing benefits to a larger population.
It’s estimated that Extra Help is now available to approximately 3 million additional Medicare enrollees with limited resources and lower incomes. In addition, approximately 300,000 individuals who were previously receiving partial Extra Help benefits are now eligible for the full benefit amount under the new rules.
Plan Cost Changes
Beginning in 2024, those eligible for Extra Help are no longer required to pay premiums for their Medicare drug plan or meet any plan deductibles.
When prescription drug spending is high enough to reach Medicare’s catastrophic coverage phase, beneficiaries do not have to pay coinsurance or copayments, effectively capping out-of-pocket prescription drug coverage at $3,250 in 2024.
Beginning in 2025, out-of-pocket (OOP) prescription drug costs are automatically capped at $2,000 for any Medicare beneficiary, regardless of whether they receive Extra Help. The OOP maximum is also indexed in future years. In addition, beneficiaries now have the option to pay out-of-pocket costs on a monthly basis throughout the plan year, creating additional financial flexibility.
Drug Cost Changes
The costs for both generic and brand-name medications have been reduced for eligible individuals. Now, each generic drug costs a maximum of $4.50, while each brand-name drug costs a maximum of $11.20. On average, those eligible for the full Extra Help benefit can save about $5,300 per year on their prescription drug costs.
Eligibility for Expanded Extra Help
In 2024, to be eligible for Extra Help, you must meet the following criteria in all states except for Hawaii and Alaska:
- Reside within the United States
- Have an income of less than $21,870 individual / $29,580 married filing jointly.
- Have resources of less than $16,600 individual / $33,240 married filing jointly.
Note that the term “resources” refers to money in your checking and savings accounts, stocks and bonds, and retirement accounts. Other assets, such as your home, furniture, personal and household items, one vehicle, burial plots, and up to $1,500 saved for burial expenses, are not included.
Eligibility requirements can change each year, so if you are not eligible for Extra Help in 2024, you may still be eligible in the future. You can reapply any time your circumstances change.
Certain individuals are also automatically eligible for Extra Help, including those who receive:
- Full Medicaid coverage
- Supplemental Social Security Income (SSSI) benefits
- Help paying Medicare Part B premiums through their state’s Medicare Savings Program
How to Apply for Expanded Extra Help
If you are already receiving Extra Help, the transition to the expanded benefits happens automatically. There is no need to reapply or take additional action.
If you are not currently enrolled in Extra Help but believe you may be eligible under the expanded criteria, the application process is fairly straightforward:
- Access an application. You can submit your application through the Social Security Administration (SSA) by visiting the SSA website or apply over the phone by calling the Social Security office at 1-800-772-1213 (TTY 1-800-325-0778).
- Fill out application. When applying for Extra Help, you need to provide information about your income and resources to determine your eligibility. To help ensure a smooth process, gather the following documents:
- Tax returns
- Bank statements
- 401(k) and IRA account statements
- Pension and annuity statements
- Veterans’ and Railroad Retirement Board benefit statements
- Await eligibility decision. Once you’ve submitted your application, the Social Security Administration reviews your information and notifies you of your eligibility via a letter that explains your new costs for prescription medications.
- Enroll in Part D. If you have not selected a Medicare Part D plan, Medicare automatically enrolls you in one. However, you also have the option to choose a different plan at a later date if you prefer.
Once you are enrolled in Extra Help, you receive it for the remainder of the calendar year, even if your income changes mid-year.
Each year, the Social Security Administration sends out notifications to individuals who are no longer eligible or those who have been switched to a different plan or experienced other changes. If you do not receive a letter, your Extra Help plan has not changed.
Extra Help Expansion Makes Prescription Drugs More Affordable Overall
The expansion of Extra Help in 2024 is set to make a significant difference for many Medicare beneficiaries. By eliminating premiums and deductibles, reducing the costs of both generic and brand-name medications, and increasing out-of-pocket protection, this program provides substantial financial relief to those who meet the newly broadened income and resource criteria.
If you believe you might be eligible for expanded Extra Help, or if you’re already receiving benefits and want to understand how these changes affect you, now is the time to act. Review the new eligibility criteria, and if necessary, reach out to the Social Security Administration for assistance in applying for or understanding your Extra Help benefits.