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Medicare Prescription Drug Subsidy

NOTE: This topic is provided for archival information only. The interim Medicare Drug Discount Card Program it describes is being phased out effective December 31,2005. Effective January 1, 2006, everyone with Medicare, regardless of income, health status, or prescription drug usage, will have access to prescription drug coverage through the new Medicare Part D Prescription Drug Coverage program.

You can use your Medicare-approved drug discount card until May 15, 2006, or until you join a Medicare prescription drug plan, whichever is first. Once you have a Medicare prescription drug plan, you can't use your Medicare-approved drug discount card. You will get coverage for prescription drugs through the Medicare prescription drug plan instead of saving with the discount card.

If your annual gross income is below a certain level, Medicare may pay your annual enrollment fee for the Medicare-approved drug discount card and provide up to a $600 credit on your card each calendar year (2004 and 2005) toward your prescription drugs. You can use the $600 credit toward most prescriptions, even those not on the discount drug list. If you get the $600 credit to help you pay for your prescriptions, you will still have to pay a percentage of the cost for each prescription.

You may read the remainder of this topic in sequence, or jump directly to one of the sections listed below:

·          Eligibility

·          Income That Should Be Included

·          Income That Should Not Be Included

·          Amount of Credit

·          Enrollment

·          Additional Information

Eligibility

You may be able to get the $600 credit to help pay for your prescriptions if:

·          you have Medicare Part A and/or Part B, and

·          your annual income in 2004 is no more than $12,569 ($1,048/month) if you are single, or no more than $16,862 ($1,406/month) if you are married (this includes your income and your spouse's income).

NOTE: There are different rules for Alaska and Hawaii:

Income limits in Alaska are $15,701 ($1,309/month) if you are single and $21,074 ($1,757/month) if you are married.

Income limits in Hawaii are $14,445 ($1,204/month) if you are single and $19,386 ($1,616/month) if you are married.

You can't get the $600 credit if you already have outpatient prescription drug coverage from any of the following:

·          Medicaid

·          TRICARE for Life (military health insurance)

·          Employer group health plan or other health insurance coverage including a few Medicare Managed Care Plans (other than a Medicare Advantage plan or Medigap policy)

·          FEHBP (health insurance for Federal employees or retirees)

Even if you don't qualify for the $600 credit, you may be able to save money on your prescriptions with a Medicare-approved drug discount card.

If you and your spouse both qualify for the credit, you will each get the credit and won't have to pay your annual enrollment fee.

Income That Should Be Included

The following sources of income should be included when calculating your gross income for your $600 credit enrollment form:

·          Employee compensation (salary, wages, tips, bonuses, awards, etc.)

·          Unemployment compensation

·          Pensions and annuities

·          Social Security benefits (including Social Security Equivalent portion of RR Retirement)

·          Railroad Retirement benefits

·          Veterans Affairs (VA) benefits

·          Military and government disability pensions – armed forces, Public Health Service (PHS), National Oceanic and Atmospheric Administration (NOAA), Foreign Service (based on date pension began, combat-related pension, etc.)

·          Individual Retirement Account (IRA) distributions

·          Interest (savings accounts, checking accounts, etc.)

·          Ordinary dividends (stocks, bonds, etc.)

·          Refunds, credits, or offsets of state and local income taxes

·          Alimony received

·          Business income

·          Capital gains

·          Farm income

·          Rental real estate, royalties, partnerships, trusts, etc.

·          Other gains (sale or exchange of business property)

·          Other income (lottery winnings, awards, prizes, raffles, etc.)

Income That Should Not Be Included

The following sources of income should not be included when calculating your income for $600 credit enrollment form:

·          Inheritances and gifts (taxed to estate or giver if not under limits for exemption)

·          Interest on state and local government obligations (e.g., bonds)

·          Workers' Compensation payments

·          Federal Employees Compensation Act payments

·          Supplemental Security Income (SSI) benefits

·          Income from national senior service corps programs

·          Public welfare and other public assistance benefits

·          Proceeds from sale of a home

·          Lump sum life insurance benefits paid upon death of insured

·          Life insurance benefits paid in installments

·          Accelerated life insurance death benefit payments (e.g., viatical settlements, terminal illness, chronic illness)

·          Medical Savings Accounts (MSA) withdrawals for medical expenses

·          Payments from long-term care insurance policies (subject to limitation)

·          Accident or health insurance policy benefits

·          Accident compensatory damages

·          Child support payments received

·          Most foster care provider payments received

·          Disaster Relief grants

·          Disability payments as the result of a terrorist attack

Amount of Credit

In 2004, you can apply for the $600 credit anytime. You will get the full $600 credit if you qualify, no matter when you apply throughout the year. If you get the $600 credit in 2004, you don't have to reapply for help with your prescriptions in 2005. You will automatically get another $600 credit for 2005.

If you apply for the $600 credit for the first time during 2005, the company must receive your completed enrollment form in the beginning part of the year. If you apply later, you won't get the full $600 credit from Medicare. The chart below shows how much you will get depending on when in 2005 you join:

Enrollment

If you think you might qualify for the $600 credit, you must complete Form CMS-20016-B, Standard Enrollment Form For A Medicare-Approved Drug Discount Card and a Credit to Help Pay For Your Prescription Drugs. When complete, sign and return the form to the sponsor of the discount card you have chosen. You can only enroll in one Medicare-approved drug discount card at a time.

Once you choose a Medicare-approved drug discount card, you will need to fill out an enrollment form. You can also view and print an enrollment form now. The forms and instructions can be downloaded from this webpage:
http://www.medicare.gov/MedicareReform/formsandinstructions.asp

Depending on the company, you can enroll by:

·          mailing or faxing the completed form to the company,

·          providing your information over the telephone, or

·          fill out your information on the web.

Once your enrollment form has been approved, the company will send you a Medicare-approved drug discount card. The company will also send specific materials you will need, like a member handbook, discount drug list, pharmacy provider directory, and complaint procedures.

Additional Information

The Medicare Worksheet: Five Steps to Choosing a Medicare-Approved Drug Discount Card is available in PDF format (requires Adobe Acrobat Reader) online at:
http://www.medicare.gov/Publications/Pubs/Pdf/5steps.pdf

The complete Medicare Guide to Choosing a Medicare-Approved Drug Discount Card is available in PDF format (requires Adobe Acrobat Reader) online at:
http://www.medicare.gov/Publications/Pubs/pdf/11062.pdf

You can use the online tool to begin searching for available Medicare-approved drug discount cards and other assistance programs in your area. It is available at:
http://www.medicare.gov/AssistancePrograms/home.asp

See also:

Medicare Drug Discount Card

Medicare - Overview

Source

http://www.medicare.gov/AssistancePrograms/home.asp

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