By STEPHEN NOHLGREN, Times Staff Writer
Published December 4, 2005
For four decades, Congress scrupulously kept Medicare free of any "means test." Millionaire or mill worker, it didn't matter. Medicare was a public insurance plan, so everyone paid the same premiums, the same deductibles and the same copayments.
That's about to change.
The Part D drug benefit that takes effect Jan. 1 is a potential bonanza for some people of limited means. They may not have to pay a single monthly premium. When they fill a prescription, they often will pay only $5 or less.
According to a study conducted by PriceWaterhouseCoopers, out-of-pocket costs for people with limited means will average $130 a year, compared with the $1,950 they now spend on prescription drugs.
The good news: As many as one-third of Medicare's 43-million aged and disabled beneficiaries may qualify.
The bad news: Because of an asset test, about 2.4-million people with small nest eggs may lose out, even though their incomes put them well under the qualifying level.
"They scrimped and saved and now we are going to kill them for that, while the people who spent all their money are going to be rewarded," said John Rother, AARP's national policy director. "That's the perverse nature of means tests. It can send all the wrong signals."
If enough people sign up, Part D's low-income benefit could dramatically alter the social dynamics of drug insurance.
Right now, only certain groups of people tend to enjoy decent drug coverage: Poor people on Medicaid; veterans with VA coverage; government and union retirees, and people with enough means to buy expensive Medicare supplement policies.
Millions of retirees, however, have too much money to qualify for Medicaid but nowhere near enough to buy the drugs they need. Gas prices, taxes and Medicare's ever-rising Part B premiums squeeze them into impossible choices.
The new low-income benefit can offer relief, in the form of a subsidy that Medicare calls "special help."
Single people with incomes below $14,355 and liquid assets below $11,500 can qualify. For married couples, the thresholds are $19,245 in income and $23,000 in liquid assets. Houses, cars and personal property do not count as assets.
Those thresholds are considerably more generous than qualifying levels for other state and federal programs - like Medicaid - that help poor people with drug bills.
People who qualify for the subsidies will enjoy several benefits. Many will pay no premiums, saving about $33 a month. Others at the higher end of the income range will pay a partial premium, based on a sliding scale.
Many Medicare drug plans carry an annual $250 deductible, but people who get the subsidies will pay either $0 or $50.
Copayments vary from plan to plan, but are considerably less for people who get the subsidies. Copayments can run as low as $1 for generics and $3 for brand name drugs.
Most plans contain a big "coverage gap," where beneficiaries pay 100 percent of drug costs between $2,250 and year and $5,100. People who get the subsidies will pay 15 percent or less in these gaps.
About 6-million low-income beneficiaries are already on Medicaid or on special state programs where Medicaid pays their Medicare Part B premiums. The federal government will automatically assign these people to a Medicare Part D plan.
Another 8-million people are not on any Medicaid program but can qualify for a low-income subsidy - if they apply. The Social Security Administration has mailed letters to potential applicants; so far about 3-million have returned applications.
Though no one can pick a drug plan until Nov. 15, people who might qualify for the low-income subsidies should take action now, by filling out an application and mailing it in. Anyone interested can also apply at www.ssa.gov That will get the paperwork into the federal bureaucracy well before the end of the year.
Robert Hayes, of the Medicare Rights Center, is no fan of the drug benefit. But he has a message to anyone who might qualify for a low-income subsidy: "Run, don't walk, to sign up."
FOR INFORMATION
For more information on low-income subsidies, consult Pages 55 through 62 of Medicare & You 2006, which the government mailed to every beneficiary, or call 1-800-633-4227 or the Social Security Administration at 1-800-772-1213.
For an application, call the Social Security Administration at 1-800-772-1213 or visit www.ssa.gov
To find whether you qualify for other low-income programs that can help with drug bills and Medicare costs, visit www.accesstobenefits.org and click on BenefitsCheckUpRx.
[Last modified December 4, 2005, 07:27:06]
