Medicare costs can add up for both prescriptions and medical costs. Even with Medicare coverage, there are a myriad of potential expenses including premiums, co-pays, co-insurance, and prescription drug costs, as well as potential penalties for Part B or Part D. The Extra Help/Low Income Subsidy can reduce low-income Medicare beneficiary’s out-of-pocket prescription drug costs. It is necessary to understand all the ins and outs of this program to determine if you qualify and what your costs will be once you are approved.
What is the Low-income Subsidy (LIS)/ Extra Help Program?
Extra Help, also known as Low-income Subsidy (LIS), is a federal program that helps low-income Medicare beneficiaries pay for out-of-pocket costs associated with Part D prescription drug coverage. This may include help with monthly premiums, annual deductibles, and co-payments related to the Part D prescription drug program. The assistance from the program is estimated to be worth about $5,000 per year.
To qualify for Extra Help, a person must be receiving Medicare, have limited resources and income as indicated by the graph below, and reside in one of the 50 States or the District of Columbia.
The level of subsidy depends on the level of income and assets a person has available. The subsidy level can be awarded as either Full LIS or Partial LIS. The Extra Help income test for determining which level of subsidy an individual can qualify for is based on the Federal Poverty Levels (FPLs). But do not assume you are not eligible if your income is above the FPL. The maximum income for partial LIS is up to 150% of the FPL. Here are the maximum income and resource levels a person can have and still qualify for at least partial Extra Help in 2023. The amounts change each year based on each years FPL.
LIS – EXTRA HELP
How to apply for LIS/Extra Help
The application for Extra Help is completed with Social Security. The quickest way to apply is online through the Social Security website here. However, you can also call Social Security at 1-800-772-1213 to apply by phone, request a paper application mailed, or make an appointment at the local Social Security office. Social Security can take approximately 3 weeks to process and make a determination on your application.
When filling out the application for LIS, not all sources of income may need to be included. Below is a list of income that needs to be included, as well as income that can be excluded.
The following is the countable income that needs to be included on the application:
- Social Security benefits (e.g., retirement, SSI), Railroad Retirement benefits
- Pensions or annuities, including veteran’s pensions
- Wages (gross) or earnings from self-employment (net)
- Rental income (net)
However, the following sources are excluded from income when applying:
- SNAP (Food Stamps) and LIHEAP (fuel assistance) benefits
- $20 monthly in unearned income, such as Social Security
- Housing or home energy assistance
- Assistance from others to pay your household expenses
- Work-related expenses for people who get Social Security benefits for a disability or blindness
Similar with income limits, your assets cannot be over the specified limits above to qualify for any level of LIS.
The following are resources that need to be included or excluded when listing resources on the Extra Help application.
Countable resources include:
- Financial institution accounts (e.g., checking, savings, CDs)
- Cash at home
- Stocks, bonds, savings bonds, mutual funds, individual retirement accounts (IRAs), 401(k) accounts
- Real estate (equity value) other than primary home
- Certain trusts that allow a person to revoke or have direct use of funds
Excluded resources include:
- Home in which the applicant lives
- All vehicles (autos, trucks, motorcycles, boats, snowmobiles, etc.)
- Household goods/furnishings, and personal effects (e.g., jewelry)
- Cash surrender value of life insurance policies
- In-kind support (e.g., non-cash help such as shelter)
- Irrevocable burial trusts/burial contracts
After applying, Social Security will review the application and send a letter letting you know if you qualify for Extra Help. People who already have Medicaid do not need to apply for LIS and will automatically qualify and get a letter from CMS letting them know.
Extra Help Application Tip: When applying for LIS, you can opt to start the application process for the Medicare Savings Program (MSP) and the Social Security Administration will send the application data to the state Medicaid office. MSP helps reduce the out-of-pockets costs of Medicare Part A and Part B.
Extra Help/ LIS Annual Review Eligibility
If you applied for Extra Help through Social Security, then you will need to continue to meet eligibility requirements each year. Reviews generally happens in August of each year and you may receive a letter from Social Security if you need to complete a review. If you do not complete your review, or if your review shows you no longer qualify for Extra Help, then it will end December 31st. Keep in mind, this does not cancel your Part D Prescription Drug plan. If you anticipate your Extra Help will end, then you should review the Part D Prescription Drug plan you are enrolled to determine what your new out-of-pocket costs will be without it. It may be a good idea to compare to other Part D Prescription Drug plans at this time.
If you originally automatically qualified for Extra Help because you had Medicaid, Supplemental Security Insurance (SSI), or a Medicare Savings Program (MSP), and you are still enrolled in one of these programs come the fall, then you will not have to do an annual review through the Extra Help program. The state will automatically inform Medicare that you are still enrolled. But if you have lost your status in the Medicaid, SSI, or MSP program then you will get a letter from Social Security stating your Extra Help benefits will end December 31st . If this is the case, you can apply for Extra Help directly through Social Security if your income falls within the eligibility limits and you don’t want your Extra Help benefits to end.
Extra Help/ LIS Coverage Levels
Extra Help benefit levels are broken down into two levels of help. These levels are Full Low-Income Subsidy and Partial Low-Income Subsidy, and both levels of Extra Help have a sliding scale of assistance within them. Both Full and Partial subsidies eliminate the Part D coverage gap, as well as any Part D Late enrollment penalties.
Full Low-Income Subsidy is for those with lower income and fewer resources. Partial Low-Income Subsidy is for those with slightly higher income and levels of resources than full subsidy, but still fall below 150% FPL. Refer to the graph below for more information on what each level means for your out-of-pocket costs.
Enrollment options and periods with LIS/Extra Help
Qualifying for any level of Extra Help allows you to enroll or change plans outside of Medicare’s Annual Election Period (AEP) for both stand alone Part D Prescription Drug Plans or Medicare Advantage plans with Part D. If you qualify for LIS, you can make a change once each quarter during the first 3 quarters of the year, as well as once during AEP with an effective date of January 1st.
Aside from these quarterly changes, you can also add or change a plan if you have any change in your LIS status. This includes if you lose eligibility, gain eligibility, or if your eligibility level moves up or down the previous mentioned benefit levels.
Find out if you qualify for Extra Help!
Many people who can qualify for Extra Help/LIS are not receiving the benefit. They either do not realize they may qualify or are not aware of the program. If you qualify, this is a big benefit that can help you afford prescriptions and get more treatment.
CONTACT US TODAY to speak with a Licensed Agent to determine if you may qualify or other Medicare questions.