CHICAGO (Reuters) - More than 2 million people on Medicare could be getting their prescription drugs nearly for free, but don't. That's because they have not signed up for Extra Help, an important Medicare benefit that subsidizes drug costs for low-income senior citizens.
Extra Help can pay nearly all of the prescription drug costs a senior incurs in a Part D drug plan. It is provided automatically to seniors receiving Medicaid or Supplemental Security Income benefits. In some states, Extra Help also is automatic for people receiving benefits through the Medicare Savings Program, which helps subsidize Medicare Part A (hospitalization) and Part B (outpatient) premiums.
But among seniors who do not automatically qualify, less than half are enrolled in Extra Help, according to Jack Hoadley, a research professor at the Health Policy Institute of Georgetown University who tracks the program.
"The government reaches out with information on this from time to time," Hoadley says. "What's harder is to figure out how to reach out specifically to people who are eligible."
With Medicare's annual fall enrollment season in full swing - and running through December 7 - it is a good time to remind seniors that they may be eligible. The benefit is substantial - annual savings can easily total $800 on premiums and deductibles, and can be much higher for seniors with high drug spending.
Two factors determine your eligibility for Extra Help: income and assets.
Your income cannot exceed the federal poverty level guidelines. For seniors with incomes of 135 percent of the federal poverty level or lower, Medicare pays the entire annual premium, expected to average $480 next year, according to the Kaiser Family Foundation. Extra Help also covers deductibles, which typically run $310 for the year.
What's more, Extra Help enrollees are exempt from the notorious donut hole - the coverage gap that next year will begin when combined spending by patients and insurers hit $2,850, and ends when spending reaches $4,550.
Enrollees are responsible only for a small co-pay for drugs that are covered under the plan - the cost is $2.55 for generic drugs, and $6.35 for brand-name medications.
Seniors with incomes ranging from 135 percent to 150 percent of the federal poverty level get a partial subsidy of premiums and deductibles on a sliding scale, and are responsible for somewhat higher co-pays.
This year, the poverty level guidelines translated into full Extra Help benefits to individual non-Medicaid enrollees with annual income of less than $17,235 and assets less than $13,300; married enrollees qualified with income below $23,265 and assets less than $26,580.
Key income sources that are counted for this purpose include wages, Social Security benefits, pensions, annuities, alimony, rental income and workers' compensation.
The asset definition, meanwhile, includes funds in checking or savings accounts, stocks, bonds, mutual funds and Individual Retirement Accounts. Your home, car, life insurance policies and other miscellaneous items are not counted.
Seniors who are not automatically qualified for Extra Help will need to apply through the Social Security Administration, which issues a certification letter to their plan provider.
Getting the letter can take up to four weeks, according to Frederic Riccardi, director of client services for the Medicare Rights Center. You will receive Extra Help drug benefits retroactively once your plan receives the information of your effective date.
Apply online (https://secure.ssa.gov/i1020/start ) or call 1-800-772-1213 to get the process started.
Extra Help beneficiaries shop for plans in the Part D marketplace just like higher-income seniors. To get the full subsidy, they must enroll in a plan that qualifies to participate in Extra Help by offering premiums that meet - or fall below - certain levels.
You can find these plans through the online Medicare Plan Finder, which lets you search for qualified plans by checking off a box stating that you are receiving Extra Help or are on Medicaid.
"You'll see simple options for sorting through the qualified plans," Riccardi says. "It's really improved over the past few years."
Getting the most out of Extra Help also requires careful checking to make sure your prescription drugs are covered under a plan's formulary - the list of medications that are covered, and under what conditions and rules. But if you do run into problems with your plan provider, you are permitted to switch plans at any point in the year - most Part D enrollees can switch plans only during the annual fall enrollment period.
OTHER MEDICARE ASSISTANCE
Seniors also can qualify for help with Medicare Part A (hospitalization) and Part B (outpatient) expenses through their state's Medicare Savings Program.
State Medicaid programs partner with the federal government counterparts, so income and asset qualifications vary depending on where you live. Medicare Savings Programs pay your entire Medicare Part B premium each month. Some also pay for Part B coinsurance and copayments, depending on one's income. Although most Medicare beneficiaries do not pay a Part A premium, some Medicare Savings Programs provide help for the few that do.
Contact your state Medicaid office to determine if you qualify for benefits in your state.
You will find details on how Extra Help works in the free annual Medicare & You guide, which is mailed to all Medicare beneficiaries. Download the 2014 edition here: (http://1.usa.gov/HhuNCX)
Get your questions answered by Medicare (1-800-633-4227), or the Medicare Rights Center (1-800-333-4114). State-level guidance is available from your local State Health Insurance Assistance Program.
Locate yours here (http://bit.ly/1adwoma).
For more from Mark Miller, see http://link.reuters.com/qyk97s
(The author is a Reuters columnist. The opinions expressed are his own.)
(Editing by Lauren Young and Matthew Lewis; Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance)
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