What Is Medicare Extra Help?

Medicare is the federal health insurance program for adults age 65 or older and certain younger people with disabilities or permanent kidney failure. It is offered in several parts:

• Medicare Part A is hospital insurance.
• Medicare Part B is medical insurance covering doctor’s visits, outpatient care, and preventive services.
• Medicare Part D is prescription drug coverage. Private companies offer Medicare Advantage plans that provide Part A, B, and D coverage under Medicare rules.  

While Medicare Parts A and B are provided by the government, Part D is an add-on that must be paid for separately by the Medicare recipient. For those with low incomes, this could be a difficult proposition. Luckily, there are solutions to help people in these situations pay for it.

What Is Medicare Extra Help and How Does It Work?

The Medicare Extra Help Program helps people with limited income and resources pay for Medicare Part D, which covers prescription drugs and vaccines. This federal program, called the Low-Income Subsidy (LIS), pays for the Part D premium, coinsurance and copayments, and annual deductible. Anyone with Medicare can opt to enroll in Medicare Part D.

You can receive full or partial Extra Help benefits depending on your income. Lower-income individuals qualify for full Extra Help benefits, and those with slightly higher incomes receive partial Extra Help and assume more out-of-pocket costs.  

For example, with partial Extra Help, you might pay a $99 deductible and a premium based on your income for all prescription drug and vaccine-related costs. But with full Extra Help, you’d pay no premium or deductible.

The Medicare Extra Help program is administered by the Social Security Administration (SSA), which estimates the Low-Income Subsidy is worth more than $5,000 each year.

Benefits of Medicare Extra Help

There are many benefits to Medicare Extra Help that could alleviate the financial pressure of your prescription drug and vaccine needs.

Premium Payments  

Extra Help covers your Plan D premiums up to a maximum benchmark premium offered by your state. If your state has a benchmark plan that costs $32 per month, Extra Help pays the total cost of your premium up to that amount. If your premium is higher, you pay the difference.

Covering copays

If you’re covered by full Extra Help, in 2022, your copay for a generic drug will be $3.95 or less. Your copay for a brand-name drug is up to $9.85. When you spend $7,050, there is no copay for the rest of the year.

Medicaid recipients in a nursing home or other long-term care facility don’t have a copay for medication. 

Special enrollment periods

Usually, you can change your drug coverage only during certain times of the year. However, with Easy Help, you can change your coverage once during the first three quarters of the year. You can also make changes during the regular open enrollment period in the fourth quarter of each year.

Waive late enrollment penalty

You will pay a penalty if you enroll in Medicare Part D after your initial enrollment period ends. This penalty is waived with Extra Help. 

Who Is Eligible For Medicare Extra Help?

You must have Medicare Part A and B and live in the U.S. to apply for Extra Help. Medicare beneficiaries with Medicaid, Supplemental Security Income, or a Medicare Savings Program are automatically enrolled in Extra Help. 

Others attain the Medicare LIS by applying if they meet the requirements for income and resources.

What Are The Income Limits For Medicare Extra Help?

To qualify for the Low-Income Subsidy, an individual’s resources must be limited to $15,510 or $30,950 for a married couple. Resources include cash, bank accounts, and stocks and bonds.

You may be eligible if your annual income is $20,385 or less for an individual or $27,465 for a married couple. You might qualify if you have a higher income, if you or your spouse support other dependents have earnings from work or if you live in Alaska or Hawaii. Not all income is included in your annual total. Exclusions include food stamps, housing assistance, and earned income tax credit payments. Contact Social Security for other exclusions.

How To Enroll in Medicare Extra Help

There are multiple ways to apply for Medicare Extra Help. The Social Security Administration manages this benefit, so you apply through them. Applying online or filling out a form at a Social Security office is easy. Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) to apply by phone. Or complete SSA Form 1020 and mail it in. 

Before you begin, gather information on the dollar value of your household resources, such as bank accounts, stocks, bonds or investments, cash, and real estate other than your home. Also, have data on income such as Social Security, veteran’s benefits, pensions, and wages. The Social Security Administration will review your application and notify you by mail if you are eligible.

Applying for Extra Help does not enroll you in a Medicare drug plan. Even if approved, your benefits won’t begin until you apply for prescription drug coverage through Medicare. To enroll in a Medicare prescription drug plan, visit Medicare.gov or call 1-800 MEDICARE (1-800-633-4227; TTY 1-877-486-2048). Find a plan that minimizes out-of-pocket costs while giving you access to your preferred medication.