Every prospective client is depending on your expertise and first-rate advice when it comes to finding the best healthcare protection at the best possible price.
Dedicated to going the extra mile for every client or prospective client, you explore all the options and help the people you serve by leading them to the most comprehensive and affordable coverage available.
But, unfortunately, it’s not always affordable enough—or so they think.
With millions of Americans living more frugally than ever, it’s vital for an agent to know every moneysaving option available to everyone he or she serves. That doesn’t mean you’re looking for ways to cut corners with regard to the coverage you get for your clients. Far from it. As a healthcare professional dedicated to providing the best in service, you’re not about to settle for second-rate coverage for your clients simply for the sake of making a sale.
Too many Americans settle for Original Medicare because they think it’s the most affordable option. But with all the gaps in Medicare Part A and Part B coverage—and the out-of-pocket expenses that can torpedo a senior’s budget—those people often find that Original Medicare isn’t the most affordable option at all.
Factor in the cost of most prescription drugs—drugs many people who need them say they can’t afford—and it’s almost impossible to make a compelling case that Original Medicare on its own is the best option for anyone. That’s why agents around the country are advising seniors to invest in Medicare Part D prescription drug plans.
Medicare Part D plans offer prescription drug coverage. With the high cost of prescription drugs, many seniors find Part D prescription drug plans (PDPs) an essential tool for keeping drug costs within their budget. Agents on the lookout for their clients’ best interests often recommend Part D prescription drug plans to help keep prescription drug costs in check.
Participation in Part D can be especially helpful for people who have high prescription drug costs and no current prescription drug coverage. Medicare prescription drug plans pay for generic and brand name prescription drugs. To receive Part D benefits, participants must enroll in plans offered by a Medicare-approved private insurance companies. Availability of Part D plans varies from area to area.
There are two options when it comes to obtaining Medicare prescription drug coverage. One option is to join a Medicare prescription drug plan to add prescription drug coverage to Original Medicare, or to some Medicare Cost Plans, Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans. The other option is to get prescription drug coverage through most Medicare Advantage plans, particularly Health Maintenance Organizations (HMOs) and Medicare Preferred Provider Organizations (PPOs).
As is the case with Medicare supplement insurance and Medicare Advantage plans, it is vital to shop the market on behalf of your clients in order to ensure they’re getting the best drug coverage possible for their dollar. Cost and coverage are two factors that have to be examined under a microscope—and agents who scour the market on behalf of their clients most often find what appear to be the ideal PDPs for their clients at prices that seem very affordable.
But we’re living in tough economic times, remember. For some seniors every dollar counts, and the benefits of long-term gain are often outweighed by the difficulties monthly premiums and other costs associated with PDPs may pose. Paying those costs is almost certain to be beneficial in the long run, but the long run often isn’t always the major concern for seniors living on a tight budget—and it can break an agent’s heart when someone walks away from drug coverage he or she needs in order to save a little money in the short run.
Fortunately, there is a Low-Income Subsidy available to assist some people who may otherwise feel they cannot afford to enroll in a Part D prescription drug plan. This means, along with all the helpful information you provide clients about their coverage options and costs, it’s important to know where each person you advise stands with regard to eligibility for assistance in paying for drug coverage. No one who is eligible for Medicare ought to go without prescription drugs they need, and one of the greatest services an agent can perform is to show clients with limited financial resources that they can indeed afford prescription drug coverage they thought they would have to do without.
Also called Extra Help, the Low-Income Subsidy (LIS) is a federal program designed to help people with low income cover costs related to participation in Medicare Part D prescription drug plans.
The Low-Income Subsidy program is administered by the Social Security Administration, and, according to SSA.gov, is estimated to be worth about $4,000 per year to low-income people enrolled in prescription drug plans.
To be eligible for the LIS, an applicant must:
- Be a resident of the 50 states or the District of Columbia
- Be enrolled in a Medicare prescription drug plan
- Have limited income and assets
The Low-Income Subsidy can help cover costs of Medicare Part D monthly premiums, annual deductibles, copayments, and certain other costs associated with prescription drug plans. Enrollment in any Medicare-approved drug plan entitles a qualified applicant for the LIS, regardless of whether the individual is enrolled in Original Medicare or a Medicare Advantage plan. For people enrolled in stand-alone Part D prescription drug plans, Extra Help applies only to their prescription drug plans and not to Original Medicare or any other coverage supplementing or replacing Original Medicare. For people enrolled in Medicare Advantage plans that include prescription drug coverage, Extra Help applies only to the Medicare-approved prescription drug coverage included in those plans.
The Social Security Administration determines eligibility for the Low-Income Subsidy. Income and asset limits change from year to year, but for 2013 general limits are as follows:
[Table — Maximum Income Maximum Value of Assets
Married living with spouse $23,265 per year $26,580
Married, not living with spouse $17,265 per year $13,300
Single or widowed $17,235 per year $13,300 ]
Assets considered in determining eligibility for Extra help include:
- Real estate other than the primary home
An applicant’s primary home is not included regardless of its value. Among other assets the SSA excludes when determining eligibility are vehicles, life insurance, burial plots, personal possessions, and back payments from Social Security.
Figures given above are general limits determining eligibility for Extra Help. Up to those limits, people awarded Extra Help qualify for either a full subsidy or a partial subsidy depending on their income during the previous year as a percentage of the federal poverty level (FPL).
For 2013, the federal poverty level in the 48 contiguous states and the District of Columbia has been set as follows:
- $11,490 for a person living alone
- $15,510 for a family of two living in the same household
- $19,530 for a family of three living in the same household
The full subsidy income limit of 135 percent of the FPL means that people otherwise qualifying for Extra Help must earn an income not exceeding:
- $15,511.50 per year ($1,293 per month) if single or widowed
- $15,511.50 per year ($1,293 per month) if married but not living with a spouse
- $20,938.50 per year ($1,745 per month) if married and living with a spouse
The partial subsidy income limit of 150 percent of the FPL means that people otherwise qualifying for Extra Help must earn an income not exceeding:
- $17,235 per year ($1,436 per month) if single or widowed
- $17,235 per year ($1,436 per month) if married but not living with a spouse
- $23,265 per year ($1,939 per month) if married and living with a spouse
Poverty guidelines for Alaska and Hawaii are different. Although the same percentages of the federal poverty level apply to LIS eligibility in those states, they translate to higher dollar amounts. For further information specific to Alaska and Hawaii, refer to the Dept. of Health and Human Services document, 2013 Poverty Guidelines.
What Does Extra Help Cover?
For people receiving the full subsidy, the LIS typically covers premiums and deductibles associated with prescription drug plans. While the full cost of premiums may not be covered in some cases, the Low Income Subsidy pays amounts ranging from about $20 per month (in Nevada) to about $43 per month (in New York) to help people with low incomes pay their monthly Medicare Part D premiums. In the vast majority of states, the LIS pays a maximum of between $30 and $40 per month to cover Part D premiums.
People receiving the full subsidy but with assets approaching LIS limits may be required to pay an annual deductible of about $65. They may also be required to pay coinsurance charges of up to 15 percent.
People receiving the partial subsidy normally pay affordable monthly premiums based on a sliding scale, an annual deductible of about $65, and coinsurance charges of up to 15 percent.
Everyone receiving Extra Help, whether in the form of the full or partial subsidy, normally is required to pay a small copayment for both brand name and generic drugs. Most Extra Help recipients continue to pay this small copayment until reaching the Part D annual out-of-pocket threshold of $4,750.
Some Medicare beneficiaries who qualify for the Low Income Subsidy do not have to apply for Extra Help. People who are deemed eligible without having to apply for the LIS can receive the subsidy from the first month of deemed status until the end of the same calendar year.
The Center for Medicare & Medicaid Services (CMS) lists the following categories of people as “deemed eligibles” who are automatically enrolled in Extra Help and should not need to apply:
- Full-benefit dual eligibles (FBDEs), meaning persons eligible for both Medicare and full Medicaid benefits
- Supplemental Security Income (SSI) recipients, including SSI recipients who do not qualify for Medicaid, and individuals deemed to be SSI recipients
- Medicare beneficiaries who are participants in the Medicare Saving Programs (Source: Centers for Medicare & Medicaid Services, Guidance to States on the Low Income Subsidy, page 6)
According to the CMS, deemed eligibles will automatically be awarded the subsidy based on information received from the states and the Social Security Administration. Deemed eligibles will be notified about their eligibility without having to file an application.
Deemed eligibles, like everyone else who qualifies for Extra Help, must join a Medicare Part D prescription drug plan in order to take advantage of the subsidy.
As stated on page 6 of the CMS’s Guidance to States on the Low Income Subsidy, “Full-benefit dual eligibles who fail to choose a plan will be enrolled by CMS in a plan effective the month they attain dual status. Also, QMBs, SLMBs, QIs, SSI recipients, and others who apply and are found eligible for the subsidy, will be enrolled in a plan by CMS if they do not choose a plan on their own. “
The intent of the CMS’s enrollment of deemed eligibles who fail to choose a prescription drug plan is based on the correct assumption that some coverage is better than none. Yet it is hardly in a senior’s best interest to let CMS make such an important decision for him or her. While most Part D plans do offer dependable protection at an affordable cost for the majority of Medicare-eligible Americans, it is often an agent’s efforts on behalf of a client that lead to matching that client with the drug coverage he or she really needs, and at the lowest cost possible. Many people who have enrolled in prescription drug plans will attest to the importance of agents in matching them with drug plans that have helped keep them healthy while helping them save thousands of dollars.
One way agents can continue helping their clients stay within budget is by keeping them informed about the Low Income Subsidy. Although the CMS claims that people automatically deemed eligible for the LIS will be informed of their status, there appear to be many deemed eligibles who have not been informed at all and have no idea that they are eligible for Extra Help with their prescription drug costs. It is absolutely vital, therefore, that agents help keep these people informed about their opportunities and their rights.
It is equally important that agents help clients who are not automatically deemed eligible for the LIS determine whether they, too, appear to qualify for Extra Help. If it appears clients and prospective clients do qualify for Extra Help, agents may need to guide them through the application process as well. The sad fact is, too many people who need prescription drug coverage do not get that coverage, often because they believe they cannot afford it. Many seniors need to be informed that the Low Income Subsidy can often relieve their worry and ensure they get the drug coverage they need, and agents devoted to their clients’ best interests are in the perfect position to get that very message across.