Medicare FAQs - Extra Help - Low Income Subsidy

1. What is Extra Help or Low Income Subsidy?
Extra Help or Low Income Subsidy (LIS) refers to the program offered through Medicare that assists qualified beneficiaries with Part D premiums and overall drug costs. You must meet certain criteria to qualify for LIS. The cost sharing amount for LIS depends on income and resources, but most people who qualify will pay no premiums, no deductibles and no more than $2.60 for generics and $6.50 for brand name prescriptions in 2012.

2. How does a Medicare beneficiary automatically qualify for LIS?
Certain Medicare beneficiaries will automatically qualify for the extra help (LIS) and don’t need to apply in the following circumstances:

If you have full coverage from a state Medicaid program. Medicaid no longer pays for most prescription drugs for people with Medicare.
If you get help from Medicaid paying Medicare premiums (belong to a Medicare Savings Program).
If you received Supplemental Security Income (SSI) benefits.

3. How does Medicare notify beneficiaries that they qualify for LIS?

CMS mails letters to beneficiaries to notify them of their LIS qualification.

Yellow Letter

When you have Medicare and Medicaid, CMS mails a letter on yellow paper to you as notification that Medicare is covering your prescriptions instead of Medicaid. The letter provides the name of the plan Medicare is enrolling you in and the date your coverage begins.

Green Letter

Beneficiaries who get help from their state to pay Medicare premiums (Medicare Savings Program), get Supplemental Security Income (SSI) benefits, or applied and qualified for the extra help, receive a letter from CMS on green paper. The letter provides the name of the plan Medicare has chosen for you and the date coverage begins.

4. What if the drug plan Medicare signs me up for doesn’t meet my needs?

If you're not happy with the plan Medicare assigns you to, you may be eligible for a SEP. You also can make changes to your coverage during the annual enrollment period from Oct. 15 - Dec. 7 each year.

5. What are the eligibility qualifications for LIS?

In determining your eligibility for LIS, both income and resources are counted. If you are married and living with a spouse, both of your incomes and resources are counted - even if only one is applying for extra help. If you are married, but not living with the spouse when applying, only your income and resources are counted.

6. What income counts for LIS?

Income is any cash, goods or services that can be used to meet needs for food or shelter. Examples include, but aren’t limited to the following:

Income counted:

Wages
Earnings from self-employment
Social Security benefits
Railroad Retirement benefits
Veterans benefits
Pensions
Annuities
Alimony
Rental income
Workers’ compensation

Income not counted:

Income tax refunds
Assistance based on need, funded by a state or local government
Foster care payments
The value of expenses that a blind or disabled person needs to work

7. What resources count toward LIS?
Resources include cash and other things that normally can be converted to cash within 20 workdays. Examples include, but aren’t limited to the following:

Resources counted:

Accounts at financial institutions (like savings; checking; money market; time deposits or certificates of deposit; and retirement, such as individual retirement accounts (IRA) or 401(k) accounts)
Stocks
Bonds
The value of property that isn’t connected to the home

Resources not counted:

Life insurance policies owned with a combined face value of $1,500 or less ($3,000 or less for applicant and spouse)
The home you live in and the land it’s on
Resources such as family heirlooms and wedding/engagement rings
Property of a trade or business that is essential to means of self-support
Funds received and saved to pay for medical and/or social services

8. Below is a chart illustrating the drug plans costs for individuals who automatically qualify for LIS.

*Medicare Drug Plan Costs if You Automatically Qualify* For Extra Help**
If you have Medicare and…	Monthly premium*	Annual deductible	Cost per prescription at the pharmacy (until $4,700)**	Cost per prescription at the pharmacy (after $4,700**)
...full Medicaid coverage and for each full month living in an institution like a nursing home	$0	$0	$0	$0
…full Medicaid coverage and have an annual income at or below: $10,830-single; $14,570-married	$0	$0	No more than $1.10 for generic and certain preferred drugs; no more than $3.30 for brand-name drugs	$0
…full Medicaid coverage and have an annual income below: $14,621-single; $19,670-married; assets*** below $8,100 single and $12,910 married	$0	$0	No more than $2.60 for generic and certain preferred drugs; no more than $6.50 for brand-name drugs	$0
…get help from Medicaid paying Medicare premiums	$0	$0	No more than $2.60 for generic and certain preferred drugs; no more than $6.50 for brand-name drugs	$0
…get Supplemental Security Income (SSI) but not Medicaid	$0	$0	No more than $2.60 for generic and certain preferred drugs; no more than $6.50 for brand-name drugs	$0

Notes:

*There are plans you can join and pay no premium. There are other plans where you will have to pay part of the premium even when qualifying for extra help. Tell the plan if you qualify for extra help and ask how much you will pay for the monthly premium.

** The cost per prescription generally decreases once the amount you pay and Medicare pays as the extra help reach $4,700 per year.

***Assets include savings and investments, but do not include things like your house or car, or a life insurance policy or burial fund up to $1,500 per person.

The income levels are for 2012 and can increase each year. If living in Alaska or Hawaii, or if you or your spouse pays at least half of the living expenses of dependent family members who live with you, or you work, income limits are higher. Cost sharing amounts listed are for 2012 and can change each year.

9. Below is a chart illustrating the drug plans costs for individuals who apply and qualify for LIS.

*Medicare Drug Plan Costs If You Apply and Qualify* For Extra Help**
If you have Medicare and…	Monthly premium*	Yearly deductible	Cost per prescription at the pharmacy (until $4,550**)	Cost per prescription at the pharmacy (after $4,550**)
…an annual income below: $14,621-single $19,670-married and with resources*** of no more than: $12,510-single $25,010-married	$0	$65	15% co-insurance	No more than $2.60 for generic and certain preferred drugs; no more than $6.50 for brand-name drugs
…an annual income between: $14,621-$16,245-single; $19,670-$21,855-married and with assets below: $12,510-single $25,010-married	Discounted Premium (sliding scale based on income)	$65	15% co-insurance	No more than $2.60 for generic and certain preferred drugs; no more than $6.50 for brand-name drugs

Notes:

** The cost per prescription generally decreases once the amount you pay and Medicare pays as the extra help reach $4,700 per year.

***Assets include savings and investments, but do not include things like your house or car, or a life insurance policy or burial fund up to $1,500 per person.

The income levels and resources listed are for 2012 and can increase each year. If living in Alaska or Hawaii, or if you or spouse pays at least half of the living expenses of dependent family members who live with you, or you works, income limits are higher. Cost sharing amounts listed are for 2012 and can change each year.